Over two decades of research in mice has established that embryonic stem cells (ESCs) can give rise to all differentiated cell types in the adult organism, and that ESCs are thus pluripotent. In vitro, ESCs undergo spontaneous aggregation and differentiate to form cysticembryoid bodies (EBs). These teratoma-like structures consist of semi-organized tissues, including contractile cardiac myocytes, striated skeletal muscle, neuronal rosettes, and hemoglobin-containing blood islands. In the last decade and a half, this in vitro system has been exploited to study differentiation events in a number of tissues, and has begun to be used for discovery and characterization of small-molecule pharmaceuticals. The availability of embryonic stem (ES) cells from the human might make it possible to produce specific differentiated cell types for replacement cell therapies to treat a host of degenerative diseases.