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Embryonic stem cells, derived from the inner cell mass of murine blastocysts, can be maintained in a totipotent state in vitro. In appropriate conditions embryonic stem cells have been shown to differentiate in vitro into various derivatives of all three primary germ layers. We describe in this paper conditions to induce differentiation of embryonic stem cells reliably and at high efficiency into adipocytes. A prerequisite is to treat early developing embryonic stem cell-derived embryoid bodies with retinoic acid for a precise period of time. Retinoic acid could not be substituted by adipogenic hormones nor by potent activators of peroxisome proliferator-activated receptors. Treatment with retinoic acid resulted in the subsequent appearance of large clusters of mature adipocytes in embryoid body outgrowths. Lipogenic and lipolytic activities as well as high level expression of adipocyte specific genes could be detected in these cultures. Analysis of expression of potential adipogenic genes, such as peroxisome proliferator-activated receptors gamma and delta and CCAAT/enhancer binding protein beta, during differentiation of retinoic acid-treated embryoid bodies has been performed. The temporal pattern of expression of genes encoding these nuclear factors resembled that found during mouse embryogenesis. The differentiation of embryonic stem cells into adipocytes will provide an invaluable model for the characterisation of the role of genes expressed during the adipocyte development programme and for the identification of new adipogenic regulatory genes.