The developing renal collecting duct epithelium of neonatal rabbits exhibits 3 different zones. The ampullary tip epithelium acts as an embryonic inducer and is responsible for the generation of all of the nephron anlagen. It pilots the whole microarchitecture of the kidney. In the ampullary neck epithelium multiple cell divisions cause the elongation of the embryonic collecting duct so that the organ can grow. Finally, the cells in the ampullar shaft transdifferentiate into the functional collecting duct epithelium (CD) consisting of Principal (P) and various kinds of Intercalated (IC) cells. It is unknown by which morphogenic mechanisms the ampullar cells develop into the heterogeneously composed collecting duct epithelium. Using both morphological and immunohistochemical methods, we investigated the transdifferentiation patterns leading from the ampullar epithelium to the P and IC cells in the neonatal kidney. An electron microscope analysis of the cortico-medullary course of the developing collecting duct revealed that conspicuous morphological alterations start in the neck of the ampulla. The lumen of the neck region is narrowed to a slit. While most of the cells in the ampullar tip exhibit few, short microvilli, the neck cells bear numerous, extremely long microvilli at their apical cell poles. All of the neck cells exhibit the same cytoplasmic staining pattern and the same number of mitochondria. Farther down in the shaft, clearly recognizable P and IC cells are found. Thus, differentiation into P and IC cells starts with a transitional precursor cell type in the ampullar neck. Perfusion culture experiments with the embryonic collecting duct epithelium made it possible to generate transitional and differentiated cell types for the first time under in vitro conditions. The cultured epithelial cells showed characteristics common to both P and IC cells. Immunohistochemical findings revealed that morphological differentiation starts before the functional properties of P and IC cells can be detected.