Human TE-671 cells have been used to study several aspects of neuroectodermal tumors in culture. Since the human TE-671 cell lines has been re-identified as a rhabdomyosarcoma (RD) rather than a medulloblastoma due to the presence of muscle-type nicotinic acetylcholine receptors, we re-investigated the nature of RD/TE-671 cells and characterized their differentiation induced by 2-(3-ethylureido)-6-methylpyridine (UDP-4), a potent inducer of differentiation of neoplastic cells. RD cells were also used for comparative studies. RD/TE-671 cells exposed to UDP-4 were differentiated irreversibly into postmitotic cells expressing mainly neurofilaments and, to a lesser extent, myoid proteins. In contrast to RD cells that expressed preferentially myoid and not neurofilament proteins (NFPs) upon treatment with UDP-4, differentiated RD/TE-671 cells exhibited characteristic dendritic processes and expressed NFPs (NFP68, NFP160, and NFP200), parvalbumin (calcium-binding protein), and neuron-specific enolase, as well as a small amount of vimentin and desmin. In addition, differentiated RD/TE-671 cells expressed memory for differentiation and underwent an irreversible limitation of proliferation, loss of clonogenic potential, selective repression of c-myc and p53 proto-oncogenes, and changes in cell surface architecture. Treatment of RD/ TE-671 cells with nerve growth factor or epidermal growth factor in the presence of UDP-4 did not alter the phenotype of differentiated cells, whereas co-treatment with 12-O-tetradecanoylphorbol-13-acetate and UDP-4 enhanced morphological differentiation. Therefore, we conclude that: (a) RD/TE-671 cells challenged with UDP-4 express memory to differentiate in the absence of inducer; (b) in contrast to RD cells, RD/TE-671 cells appear to be multipotent cells of neuroectodermal origin capable of differentiation into cells expressing neuronal rather than myoid proteins upon treatment with UDP-4; and (c) differentiation of RD/TE-671 cells leads to selective cessation of cell proliferation and repression of c-myc and p53 proto-oncogenes.