Induction of donor-specific tolerance using embryonic stem (ES) cells followed by transplantation of ES cell-derived tissues from the same allogeneic strain could theoretically engender successful transplantation without immunosuppression. We sought to induce tolerance using bona fide murine ES cells in immunocompetent mice. ES cells were evaluated for the expression of markers restricted to undifferentiated cells [stage-specific embryonic antigen-1 (SSEA-1) and OCT-4] and the ability to form teratomas in immunodeficient mice. BALB/cByJ mice underwent intraportal inoculation with YC5-EYFP ES cells (129 strain; R1-derived) or saline followed by transplantation with 129X1/SvJ, CBA/J, or BALB/cByJ nonvascularized, neonatal cardiac grafts. Mice were sacrificed at graft failure and underwent histologic evaluation of transplanted grafts and lymphoid organs. ES cells and early differentiated progeny underwent real time (RT)-PCR and fluorescence-activated cell sorting (FACS) analysis to detect major histocompatibility complex (MHC) gene transcription and antigen expression. ES cells expressed markers restricted to undifferentiated cells while maintaining the ability to form teratomas in immunodeficient mice. No prolongation of allograft survival or evidence of lymphoid chimerism was observed in immunocompetent recipient mice despite hepatic teratoma formation. MHC class I, class II, and nonclassical antigens were undetectable on ES cells and early differentiated progeny despite the presence of mRNA transcripts. Class I expression was strongly upregulated upon exposure to gamma-interferon. Intraportal inoculation with murine ES cells does not produce lymphoid chimerism or induce donor-specific unresponsiveness to neonatal cardiac grafts in unmanipulated immunocompetent hosts. However, specific differentiated cell types such as ES cellderived dendritic cells, or alternate routes of ES cell administration, may be effective. ES cells appear to have immune privilege, allowing them to form teratomas in immunocompetent mice.