There are few reliable experimental systems available to study the molecular mechanisms that govern human embryonic development. Embryonal carcinoma (EC) cells are pluripotent stem cells derived from teratocarcinomas and are considered the malignant counterparts of human embryonic stem (ES) cells. Several of the existing human EC stem cell lines provide robust and simple culture systems to study certain aspects of cellular differentiation in a manner pertinent to human embryogenesis. Here we review the strategies used to derive and characterize the established and recognized human EC stem cell line TERA2.cl.SP12. Furthermore, we demonstrate the value of human EC stem cells as a model of early development and focus on cell fate determination in the embryonic ectoderm.