Human embryonic stem (hES) cells have a potential use for the repair and regeneration of injured tissues. However, teratoma formation can be a major obstacle for hES-mediated cell therapy. Therefore, tracking the fate and function of transplanted hES cells with noninvasive imaging could be valuable for a better understanding of the biology and physiology of teratoma formation. In this study, hES cells were stably transduced with a double fusion reporter gene consisting of firefly luciferase and enhanced green fluorescent protein. Following bioluminescence imaging and histology, we demonstrated that engraftment of hES cells was followed by dramatically increasing signaling and led to teratoma formation confirmed by histology. Studies of the angiogenic processes within teratomas revealed that their vasculatures were derived from both differentiated hES cells and host. Moreover, FACS analysis showed that teratoma cells derived from hES cells expressed high levels of CD56 and SSEA-4, and the subcultured SSEA-4(+) cells showed a similar cell surface marker expression pattern when compared to undifferentiated hES cells. We report here for the first time that SSEA-4(+) cells derived from teratoma exhibited multipotency, retained their differentiation ability in vivo as confirmed by their differentiation into representative three germ layers.