During ontogeny, the skin is progressively populated by major histocompatibility complex class II-negative dendritic cell (DC) precursors that then mature into efficient antigen-presenting cells (APC). To characterize these DC progenitors better, we generated myeloid cell lines from fetal mouse skin by infecting cell suspensions with a retroviral vector carrying an envAKR-mycMH2 fusion gene. These cells, represented by the line FSDC, displayed a dendritic morphology and their proliferation in serum-free medium was promoted by granulocyte/macrophage colony-stimulating factor (GM-CSF), but not macrophage-CSF. FSDC expressed strong surface-membrane ATP/ADPase activity, intracellular staining for 2A1 antigen, and a surface phenotype consistent with a myeloid precursor: H-2d,b+, I-Ad,b+, CD54+, CD11b+, CD11c+, 2.4G2+, F4/80+, CD44+, 2F8+, ER-MP 12-, Sca-1+, Sca-2+, NLDC-145-, B7.2+, B7.1-, J11d-, B220-, Thy-1-, and CD3-. FSDC stimulated poorly allogeneic or syngeneic T cells in the primary mixed-leukocyte reaction, and markedly increased this function after treatment with GM-CSF, GM-CSF and interleukin (IL)-4 or interferon-gamma (IFN-gamma); in contrast, stem cell factor, IL-1 alpha and tumor necrosis factor-alpha had no effect. Preculture with IFN-gamma was required for presentation of haptens to primed T cells in vitro. However, FSDC, even after cytokine activation, were less potent APC than adult epidermal Langerhans cells in both of the above assays. Finally, FSDC derivatized with haptens and injected either intravenously or subcutaneously could efficiently induce contact sensitivity responses in naive syngeneic mice. The results indicate that fetal mouse skin is colonized by myeloid precursors possessing a macrophage/immature DC-like surface phenotype and priming capacity in vivo. These cells need further differentiation and activation signals (e.g. cytokines) to express their antigen presenting potential in vitro.