Mouse embryonic stem cells (mESCs) differentiate into all cardiac phenotypes, and thus represent an important potential source for cardiac regenerative therapies. Here we characterize the molecular composition and functional properties of "funny" (f-) channels in mESC-derived pacemaker cells. Following differentiation, a fraction of mESC-derived myocytes exhibited action potentials characterized by a slow diastolic depolarization and expressed the I(f) current. I(f) plays an important role in the pacemaking mechanism of these cells since ivabradine (3 microM), a specific f-channel inhibitor, inhibited I(f) by about 50% and slowed rate by about 25%. Analysis of I(f) kinetics revealed the presence of two populations of cells, one expressing a fast- and one a slow-activating I(f); the two components are present both at early and late stages of differentiation and had also distinct activation curves. Immunofluorescence analysis revealed that HCN1 and HCN4 are the only isoforms of the pacemaker channel expressed in these cells. Rhythmic cells responded to beta-adrenergic and muscarinic agonists: isoproterenol (1 microM) accelerated and acetylcholine (0.1 microM) slowed spontaneous rate by about 50 and 12%, respectively. The same agonists caused quantitatively different effects on I(f): isoproterenol shifted activation curves by about 5.9 and 2.7 mV and acetylcholine by -4.0 and -2.0 mV in slow and fast I(f)-activating cells, respectively. Accordingly, beta1- and beta2-adrenergic, and M2-muscarinic receptors were detected in mESC-derived myocytes. Our data show that mESC-derived pacemaker cells functionally express proteins which underlie generation and modulation of heart rhythm, and can therefore represent a potential cell substrate for the generation of biological pacemakers.