It has been demonstrated that alpha-catenin is frequently lost in diffuse type adenocarcinomas. We have isolated alpha-catenin-deficient mouse teratocarcinoma F9 cells by gene targeting. Wild-type F9 cell aggregates cultured in the presence of retinoic acid differentiated into embryoid bodies with an outer layer of epithelial cells. In contrast, cell aggregates of alpha-catenin-deficient cells did not develop outer layers under the same conditions. The outer surface cells of alpha-catenin-deficient cell aggregates, however, differentiated into epithelial cells as determined by their expression of epithelial marker proteins. These differentiated cells scattered from aggregates and showed signet ring cell morphology, which is frequently observed in diffuse type adenocarcinomas. We have provided clear evidence that a single mutation in the alpha-catenin gene may be a direct cause not only of the scattered properties of cells but also of signet ring cell formation in diffuse type adenocarcinoma.