Cancer stem cells (CSCs) are the subpopulation of cells within a tumor that can self-renew, differentiate into multiple lineages, and drive tumor growth. Here we describe a two-pronged approach for the identification and characterization of CSCs from colorectal cancer cell lines, using a Matrigel-based differentiation assay, and cell surface markers CD44 and CD24. About 20 to 30% of cells from the SW1222 cell line form megacolonies in Matrigel that have complex 3D structures resembling colonic crypts. The megacolonies' capacity to self-renew in vitro is direct evidence that they contain the CSCs. Furthermore, just 200 cells from SW1222 megacolonies initiate tumors in NOD/SCID mice. We also showed that CD44(+)CD24(+) cells enriched for colorectal CSCs in the HT29 and SW1222 cell lines, which can self-renew and reform all four CD44/CD24 subpopulations, are the most clonogenic in vitro and can initiate tumors in vivo. A single SW1222 CD44(+)CD24(+) CSC, when grown in Matrigel, can form large megacolonies that differentiate into enterocyte, enteroendocrine, and goblet cell lineages. The HCT116 line does not differentiate or express CDX1, nor does it contain subpopulations of cells with greater tumor-forming capacity, suggesting that HCT116 contains mainly CSCs. However, forced expression of CDX1 in HCT116 leads to reduced clonogenicity and production of differentiating crypt-containing colonies, which can explain the selection for reduced CDX1 expression in many colorectal cancers. In summary, colorectal cancer cell lines contain subpopulations of CSCs, characterized by their cell surface markers and colony morphology, which can self-renew and differentiate into multiple lineages.