The vegetal plate of the sea urchin embryo is specified during early cleavage divisions of the embryo as shown by the classical experiments of Horstadius (reviewed in "Experimental Embryology of Echinoderms," 1973, Clarendon, Oxford). Not until gastrulation, though, do the cells within this territory differentiate into their characteristic cell types. Vegetal plate descendents comprise the coelomic epithelium, circumesophageal muscle, basal cells, pigment cells, and endodermal epithelium. We report here that cells of the endodermal lineage acquire the ability to differentiate autonomously several hours prior to gastrulation, between the late blastula and early mesenchyme blastula stages. Cells dissociated from whole embryos after the late blastula stage have the ability to differentiate in vitro, independent of cell contacts and of the embryonic environment. In contrast, preendoderm cells removed from the embryo prior to the late blastula stage show no ability to differentiate when cultured in vitro even though cells of other lineages, e.g., ectoderm and skeletogenic mesenchyme, show morphological and molecular differentiation in these same cultures. We have used the expression of the endoderm-specific gene products Endo 1 and LvN1.2, detected by RNase protection assays and by in situ immunolabeling, to quantify endoderm differentiation independent of embryonic or cellular morphology. These studies define a transitional period in the ontogeny of the endoderm, from cells reliant on interactions to promote fate specification and organization of territories to later events involved in morphogenesis that result from cell-type-specific gene expression.