Embryonic E14 stem cells were differentiated to parietal yolksac-like flat cells in vitro in the absence of added feeders and LIF (Leukemia Inhibitory Factor). We cloned circular DNAs from the differentiating E14 cells. Out of 9 DNA inserts with the unique sequence, one clone showed a chromosomal rearrangement which could have occurred between a pair of short inverted repeats. Recombination mechanism is discussed in view of two other circularization events of the flanking sequences between short inverted repeats shown in differentiated P19 embryonal carcinoma cells.