Phenotypic heterogeneity is a characteristic feature of tumor lesions in patients with melanoma. Variability can be observed in cell morphology, pigmentation, and antigen expression. To test whether phenotypic heterogeneity could be the result of events regulated during cell differentiation, we evaluated the expression of a panel of differentiation traits on melanoma cells. Metastatic melanoma lesions from two patients, designated FD and AP, were examined histologically and found to contain mixed populations of cells. Established melanoma cell lines derived from each of these lesions were subcloned at early passage in culture (passages 7 and 8) to create a panel of clones derived from each tumor. There was heterogeneity in the expression of differentiation-related traits in clones, corresponding to distinct phenotypes observed within the original tumors. Clones from patient FD corresponded to early to intermediate stages of melanocyte differentiation, and clones from patient AP ranged from intermediate to late stages. The influence of cholera toxin and PMA on differentiation of parental cultures and subclone was studied. Results of induction studies demonstrated a number of features of differentiation of melanoma cells: regulation of differentiation traits is coordinated as a program of traits expressed sequentially at specific stages; early traits, such as the epidermal growth factor receptor and the melanoma chondroitin sulfate proteoglycan antigen, are downregulated as melanoma cells differentiate, whereas late markers, including melanin, tyrosinase activity, and antigens expressed in mature melanosomes, are upregulated; Ia (class II major histocompatibility) antigens are characteristically expressed on melanomas corresponding to early or intermediate stages of differentiation and are regulated as part of the differentiation program; minimal changes in stage of differentiation were observed during induction of parental cultures with either cholera toxin or PMA, whereas definite shifts in differentiation could be induced in selected cloned subpopulations. We conclude that melanoma cells are not frozen at a specific stage of differentiation, but rather are capable of differentiating when exposed to appropriate signals. Diversity in the differentiation state of melanoma cells can account for much of the phenotypic heterogeneity observed in melanoma lesions.