Thrombomodulin (TM) expression was investigated during differentiation of F9 embryonal carcinoma cells into primitive or parietal endoderm. Exposure of F9 cells to retinoic acid (RA) triggers differentiation into primitive endoderm and induces the appearance of barely detectable amounts of TM mRNA, whereas treatment with dibutyryl cAMP plus theophylline (CT) augments the levels of TM mRNA to a 4-fold greater extent than RA. Exposure of F9 cells to RA plus CT initiates differentiation into parietal endoderm and synergistically increases the levels of TM mRNA by 10- to 12-fold compared with CT. The time-dependent establishment of cooperativity between RA and CT appears to be secondary to RA-induced differentiation to primitive endoderm. The above alterations in TM mRNA levels occur by a transcriptional mechanism as judged by nuclear run-on experiments. Transient gene expression experiments show that the human TM promoter is transactivated by coexpression of the human RA receptor beta. Thus, the mechanism of induction of TM expression in F9 cells undergoing differentiation to parietal endoderm appears to be similar, but not identical, to that noted for other late response genes.