The purpose of this investigation was to establish and characterize a cell line derived from a rat choriocarcinoma and to evaluate the usefulness of the cell line as an in vitro model for studying trophoblast cell differentiation. A cell line was generated from choriocarcinoma explants and named Rcho-1. The cell line consisted of a mixture of cell types, including small cells growing in clusters and giant cells possessing very large nuclei. This characteristic morphology was maintained through at least 23 passages and in a series of clonal cell lines isolated from the parent Rcho-1 cell line. The Rcho-1 cell line was capable of expressing placental lactogen-I (PL-I), PL-II, PRL-like protein-A (PLP-A), and PLP-C mRNAs when cultivated in vitro; however, the Rcho-1 cells expressed only PL-I when grown beneath the kidney capsule of host rats. The Rcho-1 cell line did not express PLP-B under any experimental condition. This pattern of placental PRL expression was maintained for 23 passages. Rcho-1 cells synthesized and secreted PL-I, PL-II, and PLP-A proteins with biochemical characteristics similar to those of their placental counterparts. PL-I and PL-II mRNAs were specifically localized to giant cells. Morphological appearance and placental PRL expression were used as indices for monitoring the differentiation state of Rcho-1 cells grown under various conditions. Both morphological and functional trophoblast cell differentiation were induced by maintaining the Rcho-1 cells in postconfluent culture conditions. Postconfluent Rcho-1 cultures were characterized by an increased percentage of giant cells and an induction of placental PRL expression. Some clonal cell lines derived from the parent Rcho-1 cell line exhibited distinct patterns of differentiation and placental PRL expression. In summary, we have established a rat trophoblast cell line capable of expressing a differentiated phenotype. The differentiated phenotype includes both morphological and functional parameters and can be modulated in vitro. This cell line is a unique model for studying the control of placental PRL gene expression and the regulation of trophoblast cell differentiation.