Ectoplacental cones of mouse embryos collected on day 8 of pregnancy were grafted into the dorsal subcutaneous tissue of host mice. The grafts were collected between days 3 and 8 after transfer and processed for light and electron microscope morphological analysis as well as for cytochemistry of nonspecific alkaline phosphatase. Fragments of normal mouse placentas collected between days 12 and 18 of pregnancy were processed similarly. About 37% of the grafts were nonhemorrhagic nodules formed by different kinds of trophoblastic cells. These cells had many morphological and cytochemical features of cells present in normal mouse placentas. Nonphagocytic giant cells, glycogen cells, as well as cells with a well-developed granular endoplasmic reticulum were similar to cells found in the placenta and were always present in the grafts. Cells showing features intermediate between the above-mentioned cells and those whose cytoplasm was poor in organelles also were found in the grafts. The latter resembled cells of layer 1 of the labyrinth of the placenta. These results suggest that trophoblastic cells of the ectoplacental cones had differentiated into placental cells following their transfer to the subcutaneous tissue.