Thyroid cells obtained from 21 normal human thyroid tissue samples and 17 tissue samples from diseased thyroid, including one of Graves disease, 4 with follicular adenoma, 11 with papillary carcinoma, and 1 with follicular carcinoma, were cultured in collagen gel, and ability to produce thyroglobulin (Tg), triiodothyronine (T3) and thyroxine (T4) was determined. Changes in morphological characteristics and production of Tg, T3, and T4 induced by addition of thyroid stimulating hormone (TSH) to medium in collagen gel culture were also determined. Twenty of all cases exhibited positive reaction for Tg. No relationship was found between rate of positivity for Tg and pathologic diagnosis. Three with carcinoma showed positive reaction for T3, and 4 with carcinoma showed positive reaction for T4. Only for normal thyroid cells did addition of TSH to medium induce increase the percentage of colonies producing Tg or T4 and morphological changes including an enlarged follicular lumen and increase in the height of columnar epithelium. These findings suggest that thyroid cells in collagen culture develop in an in vivo-like fashion. In conclusion, collagen has important effects on cellular differentiation when included in extracellular matrix.