Maturation and differentiation of intestinal epithelial cells was demonstrated in segments of fetal rat small intestine, maintained for more than a month in suspension organ culture, by ultrastructural, biochemical, and immunological criteria. Over a 5-7 d period, fragments of fetal intestine evolved into globular structures covered with a single columnar epithelium ultrastructurally similar to suckling villus cells. Loose mesenchymal cells, cellular debris, and collagen were present inside the structures. After 6 d in culture, goblet cells, not present in the fetal intestine at day 18, were numerous and well developed. Intestinal endocrine cells were also observed. Immunofluorescence studies employing monoclonal antibodies specific for villus and crypt cells in vivo, and various enzyme assays, have demonstrated a level of differentiation and maturation of the cultured epithelial cells similar but not identical to that of suckling intestinal mucosa in vivo. Crypts and crypt cell markers were not observed in the the cultures. Addition of glucocorticoids to the culture medium resulted in the induction of sucrase-isomaltase but failed to promote most of the functional changes characteristic of the intestinal epithelium at weaning in vivo. Epithelial cells were identified in explants derived from the organ cultures by their specific expression of intestinal cytokeratin. Differentiation-specific markers, present in the epithelial cells in primary cultures, were lost upon selection and subculturing of pure epithelial cell populations. These results suggest a requirement for mesenchymal and/or extracellular matrix components in the maintenance of the differentiated state of the epithelial cells. The fetal intestinal organ cultures described here present significant advantages over traditional organ and monolayer culture techniques for the study of the cellular and molecular interactions involved in the development and differentiation of the intestinal epithelium.