A novel culture technique, which supports the growth and differentiation of mouse embryonic palatal epithelial cells in the absence of either an extracellular matrix substratum or feeder layers, has been developed. Using this technique we have investigated the effects of exogenous transforming growth factor alpha (TGF alpha) and serum on extracellular matrix biosynthesis by primary cultures of mouse embryonic epithelial sheets under defined experimental conditions. In all culture treatments (chemically defined medium with and without TGF alpha or serum) the palatal epithelial sheets differentiated into three regionally distinct cell phenotypes after 36 h. Nasal and oral cells differentiated into pseudostratified, ciliated columnar, and stratified squamous keratinizing epithelium, respectively. In addition, basal medial edge epithelial (MEE) cells at the oral/nasal regional interface assumed an elongated cobblestoned phenotype. In serum-free medium, collagen types IV and V, laminin, fibronectin, and heparan sulphate proteoglycan were detected immunocytochemically throughout the entire epithelial sheet. Tenascin and collagen IX were present almost exclusively in MEE cells. Types I, II, and III collagen were completely absent. Addition of TGF alpha or serum universally increased the intensity of staining, most notably that for tenascin and collagen IX in MEE cells. These results indicate that mouse embryonic palatal epithelial sheets can be maintained under defined culture conditions during which they exhibit patterns of differentiation similar to those observed in vivo. TGF alpha, known to localize to the MEE in vivo, can modulate palatal extracellular matrix biosynthesis, particularly by the MEE, suggesting a regulatory role for this factor. The culture system is suitable for further investigating the effects of exogenous factors on mouse embryonic palatal epithelial cell bioactivity and differentiation.