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Highly purified functional cytotrophoblasts have been prepared from human term placentae by adding a Percoll gradient centrifugation step to a standard trypsin-DNase dispersion method. The isolated mononuclear trophoblasts averaged 10 microns in diameter, with occasional cells measuring up to 20-30 microns. Viability was greater than 90%. Transmission electron microscopy revealed that the cells had fine structural features typical of trophoblasts. In contrast to syncytial trophoblasts of intact term placentae, these cells did not stain for hCG, human placental lactogen, pregnancy-specific beta 1-glycoprotein or low mol wt cytokeratins by immunoperoxidase methods. Endothelial cells, fibroblasts, or macrophages did not contaminate the purified cytotrophoblasts, as evidenced by the lack of immunoperoxidase staining with antibodies against vimentin or alpha 1-antichymotrypsin. The cells produced progesterone (1 ng/10(6) cells . 4 h), and progesterone synthesis was stimulated up to 8-fold in the presence of 25-hydroxycholesterol (20 micrograms/ml). They also produced estrogens (1360 pg/10(6) cells . 4 h) when supplied with androstenedione (1 ng/ml) as a precursor. When placed in culture, the cytotrophoblasts consistently formed aggregates, which subsequently transformed into syncytia within 24-48 h after plating. Time lapse cinematography revealed that this process occurred by cell fusion. The presumptive syncytial groups were proven to be true syncytia by microinjection of fluorescently labeled alpha-actinin, which diffused completely throughout the syncytial cytoplasm within 30 min. Immunoperoxidase staining of cultured trophoblasts between 3.5 and 72 h after plating revealed a progressive increase in cytoplasmic pregnancy-specific beta 1-glycoprotein, hCG, and human placental lactogen concomitant with increasing numbers of aggregates and syncytia. At all time points examined, occasional single cells positive for these markers were identified. RIA of the spent culture media for hCG revealed a significant increase in secreted hCG, paralleling the increase in hCG-positive cells and syncytia identified by immunoperoxidase methods. We conclude that human cytotrophoblasts differentiate in culture and fuse to form functional syncytiotrophoblasts.