An experimental approach was examined to study the growth and differentiation potential of different epithelial cell types isolated from the airways of adult rabbits. Clara cells isolated from the lungs of rabbits and a mixed cell population obtained from rabbit tracheas were injected (separately) into denuded rat tracheas which were then grafted into nude mice. Epithelial cells were obtained from rabbit tracheas by digestion of tracheal epithelium with proteases. The resulting cell suspension contained mucous cells, Claralike cells, ciliated cells, basal cells and a small number of inflammatory and unidentified cells. This mixed cell suspension was inoculated into rat tracheas denuded of their own epithelium which were then grafted subcutaneously onto the backs of nude mice. The tracheas were recovered two weeks later and were prepared for light and electron microscopy. These grafts were found to be lined by a tall columnar pseudostratified mucociliary epithelium, indicating that the rat tracheal grafts transplanted into nude mice supported the growth and differentiation of tracheal epithelial cells. Similarly Clara cells, isolated and purified to 85.9 +/- 2.8% (n = 9) purity from rabbit lungs by a combination of centrifugation and elutriation procedures, were inoculated into rat tracheas which were transplanted into nude mice. Two weeks later the grafts were recovered and prepared for histological and ultrastructural examination. These tracheas were lined with a low cuboidal epithelium reminiscent of bronchiolar epithelium. The epithelium was composed of ciliated cells and Claralike cells rich in smooth endoplasmic reticulum but containing only a few secretory granules. These results indicate that the tracheal graft model is suited to examine the differentiative potential of specific cell types isolated from the airways. Furthermore, they show that Clara cell isolates are able to establish an epithelium resembling bronchiolar epithelium in denuded tracheas while tracheal cells containing at least four different epithelial cell types are able to establish a mucociliary epithelium resembling the pseudostratified tracheal lining.