The QCE-6 cell line was derived from precardiac mesoderm of the Japanese quail. As previously reported, these cells are able to differentiate into two distinct cardiac cell types with myocardial or endocardial endothelial cell properties. This present communication describes in detail the derivation of this cell line and further characterizes the nontreated and induced myocardial and endothelial phenotypes of these cells. The QCE-6 cells exhibit an epithelial morphology, as well as the pattern of protein expression, that is characteristic of precardiac mesoderm. Treatment with retinoic acid, basic fibroblast growth factor (bFGF), transforming growth factor (TGF)-beta 2, and TGF-beta 3 induces these cells to differentiate and produce mixed cultures of epithelial and mesenchymal cells. The epithelial cells express myosin, desmin, and cardiac troponin I in a punctate pattern throughout the cytoplasm. These sarcomeric proteins become organized in a premyofibrillar pattern when TGF-beta 1, platelet-derived growth factor (PDGF)-BB, and insulin-like growth factor (IGF) II are added in combination along with retinoic acid, bFGF, TGF-beta 2, and TGF-beta 3. Also, these treatments induce N+,(+)-ATPase expression. When the QCE-6 cells are cultured on collagen type I, the mesenchymal cells that are promoted by retinoic acid, bFGF, TGF-beta 2, and TGF-beta 3 will invade the gel. These mesenchymal cells are positive for QH1 and JB3, which are both markers for presumptive endocardial cells within the early cardiogenic mesoderm. The addition of both PDGF-BB and IGF II to QCE-6 cell cultures will inhibit the ability of retinoic acid, bFGF, TGF-beta 2, and TGF-beta 3 to induce both the mesenchymal morphology and QH1 and JB3 expression. Collectively, these results suggest that the process of cardiac cell differentiation is regulated by multiple signals and that early cardiogenic mesoderm contains a bipotential stem cell that can give rise to both the myocardial and endocardial lineages. More important, since the QCE-6 cells are representative of early cardiogenic cells, this cell line offers a unique model system to study cardiac cell differentiation.