The histogenesis of Ewing's sarcoma remains unknown. Recent studies have suggested a relationship to an unusual form of childhood neural tumor, often termed peripheral neuroepithelioma or primitive neuroectodermal tumor. Five Ewing's sarcoma tumor cell lines were studied for evidence of a neural phenotype. Under normal culture conditions, no morphologic evidence of neural differentiation was detected. Treatment with retinoic acid, an agent known to induce marked neural differentiation in neuroblastoma, had no demonstrable effect. Treatment with either cyclic AMP or TPA, in contrast, induced pronounced morphologic evidence of neural differentiation. Cells developed elongate processes with varicosities by phase-contrast microscopy; filaments, microtubules, and uraniffin-positive dense core granules were present by electron microscopy. Three neural markers (NSE, NFTP, and cholinesterase) were absent or barely detectable in untreated cells, but became abundant after treatment. These results provide convincing evidence for a neural histogenesis of Ewing's sarcoma. They also suggest a close relationship between Ewing's sarcoma and peripheral neural tumors, including the chest wall tumor described by Askin, but only a distant relationship to neuroblastoma.