We have established a cell line (KU-SN) from a peripheral neuroectodermal tumor originating in the left scapula of a 4-year-old girl. The original tumor was immunoreactive with antibodies for neurofilament proteins, neuron-specific enolase, vimentin, S100 protein, and beta 2-microglobulin. Dense core granules, 50-150 nm in diameter, were identified by electron microscopy. The cell line was established from tumor cells in metastatic lung fluid. KU-SN cells were immunoreactive with the antibodies for neurofilament proteins, vimentin, neuron-specific enolase, S100 protein, glial fibrillary acidic protein, cytokeratin, and carcinoembryonic antigen. Besides these neuronal features, KU-SN cells express type 2 collagen and insulin-like growth factor 1 receptor. The addition of insulin-like growth factor 1 (100 ng/ml) increased the growth rate of KU-SN cells 2.1-fold over control. Some cells were positive for Alcian blue and alkaline phosphatase staining. Cytogenetic analysis of KU-SN cells disclosed a reciprocal chromosomal translocation [t(11,22)]. Northern blot analysis of KU-SN cells demonstrated amplified expression of the c-myc gene but not the N-myc gene. When tumor cells were transplanted into nude mice, cartilage was formed. The cartilage was immunoreactive with the antibody for HLA-ABC, indicating that it was derived from the tumor cells, not from mouse tissue. Chondrocytic differentiation was not observed in xenografts of Ewing's sarcoma cell lines SK-ES or RD-ES or the peripheral neuroectodermal tumor cell line SK-N-MC. These results indicate that KU-SN cells represent primitive neural crest cells having the potential for chondrocytic differentiation.