Spontaneous myogenic differentiation was observed in 2 out of 15 cases when cells from schwannomas induced in the offspring of BDIX rats by transplacental exposure to N-ethyl-N-nitrosourea (EtNU) were grown in monolayer culture following fluorescence-activated cell sorting with monoclonal antibody (Mab) 217c. Myotubes and numerous mononucleated cells no longer expressed the Schwann cell antigens 217c and S-100 protein, but rather revealed the presence of desmin, the alpha-sarcomeric form (alpha-sr) of actin, and the cell surface antigen specified by Mab RB21-7, a 250 kD glycoprotein sharing an epitope with the neural cell adhesion molecule (N-CAM). Subcutaneous reimplantation of such cells into syngeneic animals led to the appearance of tumors composed of both S-100 positive Schwann cells and desmin and alpha-sr-actin positive rhabdomyoblasts, thus closely resembling the human "Triton" tumor. With the use of the polymerase chain reaction and allele-specific oligonucleotide hybridization, DNA isolated from individual myotubes was analyzed for the presence of a T----A transversion mutation at nucleotide 2012 of the neu gene, which is diagnostic of EtNU-induced rat schwannomas. All of the amplified DNA isolates contained the mutant neu allele, thus providing direct genetic proof for the capacity of mammalian neuroectodermal cells for myogenic differentiation.