A cloned human embryonal carcinoma (EC) cell line has been derived from a testicular teratocarcinoma, and reproducibly forms EC tumors when injected into athymic (nu/nu) mice. These human EC cells are characterized by a newly described stage-specific embryonic antigen, SSEA-3. Unlike murine EC cells, they express major histocompatibility antigens (HLA-A, B, C and beta 2-microglobulin) but do not express the embryonic antigen SSEA-I. We also report that these cells appear to be capable of differentiation and that this can be induced by initiating cultures at low cell density. Differentiation is marked by the appearance of morphologically distinct cells and by the induction of SSEA-I, whereas the expression of other antigens, including SSEA-3, is initially diminished. This well-characterized system of human EC cells provides a model for the future investigation of other human teratocarcinoma cell lines and for the analysis of cellular differentiation during early human development.