Important and precisely regulated transitions in tissue phenotype from epithelium to mesenchyme and from mesenchyme to epithelium occur in the developing embryo. The gene for E-cadherin has been shown to cause fibroblastic cell lines to become epithelioid in culture. We asked whether or not the activities of the E-cadherin gene could cause a definitive embryonic mesenchyme to trans-differentiate into an epithelial phenotype. Primary corneal fibroblasts from 6-to 7-day-old chick embryos were cotransfected by impact loading with plasmids containing E-cadherin and Neor genes and selected in G418. The fibroblasts expressing E-cadherin aggregate, localize E-cadherin to lateral surfaces, and form stratified epithelia that develop zonulae occludentes and adherentes, connexin 43, cytokeratin, desmoplakin, and desmosomes. Vimentin intermediate filaments persist and no basement membranes appear, even though the cells synthesize laminin and type IV collagen. Our study is the first to demonstrate the ability of E-cadherin to induce fibroblasts to form desmosomes and stratified epithelia. The primary embryonic fibroblasts apparently have more developmental potential to transdifferentiate into epithelia than do the fibroblastic cell lines previously studied. We conclude that E-cadherin is likely to play an important role in transformation of mesenchyme to epithelium in the embryo.