Embryonic stem (ES) cells have a pluripotent ability to differentiate into a variety of cell lineages of all three embryonic germ layers in vitro. The hanging drop culture of ES cell suspension in the absence of leukemia inhibitory factor induces aggregation and differentiation of the cells into simple or cystic embryoid bodies (EBs). After 6 d of hanging drop culture, the resulting EBs are plated onto plastic dishes for the outgrowth culture. At d 21 after outgrowth culture, cell populations of EBs can give rise to three-dimensional gut-like structures that exhibit spontaneous contraction and highly coordinated peristalsis. The gut-like structures have large lumens surrounded by three layers: epithelium, lamina propria, and muscularis. Ganglia are scattered along the periphery, and interstitial cells of Cajal are distributed among the smooth muscle cells. The fundamental process of formation of the in vitro organized gut-like structures is similar to embryonic gastrointestinal development in vivo. The EBs at the 6-d egg-cylinder stage may have the potential to regulate developmental programs associated with cell lineage commitment and provide an appropriate microenvironment to differentiate ES cells into enteric derivatives of all three embryonic germ layers and reproduce the gut organization process in vitro.