The individual blastomeres of the preimplantation mouse embryo become polarized during the 8-cell stage of development. This polarity forms as a result of a specific cell-cell interaction that has been termed induction. The ability of embryonal carcinoma (EC) cells to induce 8-cell blastomere polarization has been investigated by aggregating nonpolar 8-cell blastomeres with various types of EC cells. F9, a nullipotent stem cell, induced polarization of a nonpolar 8-cell companion in 80% of the aggregates. Stimulation of differentiation of F9 cells with retinoic acid (RA), with or without dibutyryl cAMP, caused a reduction in the polarity-inducing ability of these cells. Other EC cells, PSA-1, NULLI-SCC1, 3TDM, C3HNE, and P10, all displayed less polarity-inducing activity than F9. In addition, it was observed that when any of these cell types assumed a more differentiated phenotype, either spontaneously or in response to specific stimuli, they displayed a decrease in their ability to induce 8-cell polarization. As a control, the inducing ability of cells from normal mouse tissues was examined. It was found that neither STO mouse fibroblasts nor primary cultures of mouse lymphocytes were able to induce significant polarization of 8-cell stage blastomeres. These data support the hypothesis that while undifferentiated stem cell populations retain the ability to induce 8-cell blastomere polarization, it is apparently lost upon cellular differentiation.