Evidence based on ultrastructure and immunocytochemical staining suggests that morphological gradations between epithelial and myoepithelial cells, and possibly between epithelial and alveolar-like cells, can occur in terminal ductal structures of rat and human mammary glands. In neoplastic disease the benign, carcinogen-induced rat and benign, human mammary tumours can contain epithelial, myoepithelial-like and alveolar-like cells, whereas their malignant counterparts mainly contain only epithelial-like cells. Clonal epithelial cell lines from normal rat mammary glands, from benign tumours and from SV40-transformed human mammary cultures can differentiate to either myoepithelial-like or alveolar-like cells. In those of the rat, the differentiation processes occur in steps, intermediate cells along the myoepithelial-like pathway resemble the morphological intermediates in the terminal ductal structures in vivo. Changes in specific polypeptides characterize each of the intermediate cells in vitro. One of the earliest increases observed in the myoepithelial-like pathway in vitro is that due to a novel protein p9Ka, whereas the major increases in Thy-1 antigen and the basement membrane proteins laminin and type IV collagen occur at later steps. The nucleotide sequence of the gene for p9Ka is related to that of the small, regulatory calcium-binding proteins, and antibodies raised to synthetic fragments of its predicted amino acid sequence react with only myoepithelial cells within the rat mammary parenchyma. Increases in the production of p9Ka and Thy-1 are largely due to increases in their messenger RNAs, possibly arising at the level of transcription of the DNA, whereas the increases in production of laminin and type IV collagen occur at a post-transcriptional level. The normal transcriptional promoter sequences of TATA or CAAT are not found adjacent to the genes for p9Ka or Thy-1. Cells and cell lines from malignant rat mammary tumours of increasing metastatic potential and from malignant areas of human ductal carcinomas largely fail to yield fully differentiated myoepithelial-like or alveolar-like cells in culture; however, weakly metastasizing rat cells yield variants which may retain a vestige of the myoepithelial phenotype. It is suggested that novel regulatory transcriptional element(s) may control the production of some of the proteins along the normal myoepithelial-like pathway, and that these elements may be relatively unique in their capacity to become inoperative in the malignant breast cancer cell.