Xiphoids of newborn mice consist of young chondrogenic cells of primary cartilage. During in vitro cultivation, xiphoids showed, morphologically, characteristics of adipose differentiation. This process progressed with time and by day 21 of the culture most of the cells in the xiphoids represented morphological mature adipocytes. During this period, the level of mRNA of lipoprotein lipase, and adipocyte-characteristic gene, increased steadily, while the level of collagen type II mRNA decreased. Continuous DNA synthesis during the cultivation period, even in mature adipocytes confirmed the viability of the cells. Mandibular condyles of newborn mice obtain chondroprogenitor cells as well as young and mature chondroblasts and represent secondary cartilage. Under identical culture conditions mandibular condyles obtained from the same mice undergo osteogenic differentiation and form mature bone within 7 to 10 days. Common to both xiphoids and mandibular condyles is the capacity to transdifferentiate, but they show distinct, divergent differentiation pathways. These findings indicate that cartilagenous tissue of xiphoids undergoes transdifferentiation into adipose tissue in vitro.