Culture conditions can be manipulated to vary the rate at which keratinocytes (stratified squamous epithelial cells) become committed to differentiate terminally. When deprived of anchorage in semisolid medium, normal human keratinocytes irreversibly lose the ability to reinitiate growth in surface culture with a t1/2 of 3 hr and then proceed to form cornified envelopes. We examined six established lines from human squamous cell carcinomas (SCCs) for defects in this function. One SCC line which grew progressively in semi-solid medium could not be induced to form cornified envelopes. The other five lines, which grew abortively, at best, in semisolid medium, formed envelopes under this condition but at subnormal rates. During anchorage deprivation the SCC lines became committed to differentiate much more slowly than normal, with t1/2's of 24--144 hr. SCC cells therefore possess at least a partial defect in the triggering of terminal differentiation. In vivo, such an alteration may permit malignant behavior by evading an important tissue-specific mechanism for limiting growth. In culture, the phenotype of increased survival in semi-solid medium may be used to detect and select malignantly transformed keratinocytes.