Resistance to anticancer therapy has been attributed to interindividual differences in gene expression pathways among tumors, and to the existence within tumors of cancer stem cells with self-renewal capacity. In previous studies, we have demonstrated that the human embryonic stem cell (hESC)-derived cellular microenvironment in immunocompromised mice enables functional distinction of heterogeneous tumor cells, including cells that do not grow into a tumor in conventional direct tumor xenograft platform. In the current study, we use clonally expanded subpopulations derived from ovarian clear cell carcinoma of a single tumor, to demonstrate striking intratumoral phenotypic heterogeneity that is dynamically dependent on the tumor growth microenvironment. Each of six clonally expanded subpopulations displays a different level of morphologic and tumorigenic differentiation, wherein growth in the hESC-derived microenvironment favors growth of CD44+ aldehyde dehydrogenase positive pockets of self-renewing cells that sustain tumor growth through a process of tumorigenic differentiation into CD44- aldehyde dehydrogenase negative derivatives. Strikingly, these derivative cells display microenvironment-dependent plasticity with the capacity to restore self-renewal and CD44 expression. Such intratumoral heterogeneity and plasticity at the level of the key properties of self-renewal and tumorigenic differentiation suggests that a paradigm shift is needed in the approach to anticancer therapy, with the aim of turning malignant growth into a chronic manageable disorder, based on continual monitoring of these tumor growth properties. The hESC-based in vivo model renders intratumoral heterogeneity in the self-renewal and tumorigenic differentiation amenable to biological analysis as well as anticancer therapy testing.