Protein kinase C (PKC) has been implicated as important in controlling cell differentiation during embryonic development. We have examined the ability of 12-O-tetradecanoyl phorbol-13-acetate (TPA), an activator of PKC, to alter the differentiation of cells during sea urchin development. Addition of TPA to embryos for 10-15 min during early cleavage caused dramatic changes in their development during gastrulation. Using tissue-specific antibodies, we have shown that TPA causes the number of cells that differentiate as endoderm and mesoderm to increase relative to the number that differentiate as ectoderm. cDNA probes show that treatment with TPA causes an increase in accumulation of RNAs specific to endoderm and mesoderm with a concomitant decrease in RNAs specific to ectoderm. Treatment of isolated prospective ectodermal cells with TPA causes them to differentiate into endoderm and mesoderm. The critical period for TPA to alter development is during early to mid cleavage, and treatment of embryos with TPA after that time has little effect. These results indicate that PKC may play a key role in determining the fate of cells during sea urchin development.