To investigate whether the failure of human EC cells that do not differentiate is due to the loss of key differentiationpermissive functions or the acquisition of specific inhibitory functions, we tested the ability to differentiate of 2 hybrids produced between a relatively nullipotent human EC cell line, 2102Ep, and a pluripotent human EC cell line NTERA2. Both hybrids, which exhibited an EC phenotype, were able to differentiate readily in response to retinoic acid. Furthermore, 1 hybrid produced a well-differentiated xenograft tumor, which contained, like the NTERA2 tumors, glandular structures, loose mesenchymal tissues and nodules of cartilage, after injection into a SCID mouse. Thus, the failure of 2102Ep EC cells to differentiate is recessive and due to the loss of a key gene function or functions. Nevertheless, the hybrids differed from the pluripotent NTERA2 line by failing to differentiate in neurons, indicating that 2102Ep cells also had acquired a specific, dominantly-acting, inhibitory mutation specific to the neural lineage. Furthermore, the expression of collagen II by one hybrid before and after induction with retinoic suggested a propensity for spontaneous differentiation not evident in the parental NTERA2 cells. Thus, the mechanisms that restrict the differentiation capacity of the nullipotent 2102Ep line are complex and include both recessive and dominant acting factors.