beta 1 Integrins are known to regulate terminal differentiation and morphogenesis in the adult epidermis. We have investigated their role in the embryonic development of keratinocytes by comparing the differentiation of wild-type and beta 1-null mouse embryonal stem (ES) cells. By 12-15 days in culture, differentiation of embryonic or simple epithelial cells occurred in both ES cell populations, as detected by expression of keratins 8, 18, and 19. From 21 days, expression of keratins 10 and 14 and of the cornified envelope precursor involucrin indicated that some of the wild-type cells had differentiated into keratinocytes. In contrast, keratinocyte markers were not expressed in beta 1-null cultures. The beta 1-null cells failed to express the alpha 2 and alpha 3 integrin subunits on the cell surface, consistent with the association of these a subunits with beta 1. Furthermore, alpha 6 and beta 4 expression was reduced in the beta 1-null cultures. Although beta 1-null ES cells failed to undergo differentiation into keratinocytes in vitro, they did form keratinocyte cysts expressing alpha 6 beta 4, keratins 1 and 14, and involucrin when allowed to form teratomas by subcutaneous injection in mice; furthermore, beta 1-null keratinocytes were found in the epidermis of a wild-type/beta 1-null chimeric mouse. As judged by immunofluorescence microscopy, extracellular matrix assembly was severely impaired in beta 1-null ES cell cultures, but not in the teratomas or chimeric mouse skin. We therefore speculate that the failure of beta 1-null cells to differentiate into keratinocytes in vitro may reflect an inability to assemble a basement membrane.