We have tested the effects of teratogenic and nonteratogenic compounds on cultures of differentiating embryonic neural crest cells. Compounds were evaluated for their effects on the growth or differentiation of the cells based on morphologic criteria or on quantitative changes in biochemical markers for the differentiated cells. When metabolic activation may be required, compounds were incubated in the cultures in the presence of the postmitochondrial supernatant fraction of rat liver microsomes. Nine of 11 compounds with proven teratogenic effects in vivo induced readily detectable morphologic changes in differentiating cultures. In contrast, none of the nonteratogenic compounds tested had an effect on these cultures. The use of differentiating cell cultures as a screening system for teratogens is discussed.