The growth and differentiation of human normal keratinocytes and their transformed counterparts were examined in organotypic cultures in which the keratinocytes were grown at the air-liquid interface on top of contracted collagen gel containing fibroblasts. We developed a modified culture procedure including the use of a mixed medium for keratinocytes and fibroblasts. Normal keratinocytes formed a three-dimensional structure of epithelium that closely resembled the epidermis in vivo, consisting of basal, spinous, granular and cornified layers. Cells synthesizing DNA were located in the lowest basal layer facing the collagen gel. Expressions of proteins involved in epidermal differentiation were examined by immunohistochemical staining and compared with those in skin in vivo. In the organotypic culture, transglutaminase, involucrin and filaggrin were expressed, as in the epidermis in vitro, most prominently in the granular layer. Type IV collagen, a component of basement membrane, was expressed at the interface between the keratinocyte sheet and the contracted collagen gel. Keratinocytes transformed by simian virus 40 or human papilloma virus (HPV) exhibited a highly disorganized pattern of squamous differentiation. In particular, HPV-transformed cells invaded the collagen gel. Organotypic culture is unique in that regulatory mechanisms of growth and differentiation of keratinocytes can be investigated under conditions mimicking those in vivo.