Murine embryonal carcinoma cells can differentiate into a varied spectrum of cell types. We observed the abundant and precocious development of neuronlike cells when embryonal carcinoma cells of various pluripotent lines were aggregated and cultured in the presence of nontoxic concentrations of retinoic acid. Neuronlike cells were also formed in retinoic acid-treated cultures of the embryonal carcinoma line, P19, which does not differentiate into neurons in the absence of the drug. The neuronal nature of these cells was confirmed by their staining with antiserum directed against neurofilament protein in indirect immunofluorescence experiments. Retinoic acid-treated cultures also contained elevated acetylcholinesterase activity. Glial cells, identified by immunofluorescence analysis of their intermediate filaments, and a population of fibroblastlike cells were also present in retinoic acid-treated cultures of P19 cells. We did not observe embryonal carcinoma, muscle, or epithelial cells in these cultures. Neurons and glial cells appeared in cultures exposed to retinoic acid for as little as 48 h. We found no evidence for retinoic acid toxicity, suggesting that the effect of the drug was to induce the development of neurons and glia rather than to select against cells differentiating along other developmental pathways.