Sertoli cell preparations isolated from 10-day-old rats were cultured on three different substrates: plastic, a matrix deposited by co- culture of Sertoli and peritubular myoid cells, and a reconstituted basement membrane gel from the EHS tumor. When grown on plastic, Sertoli cells formed a squamous monolayer that did not retain contaminating germ cells. Grown on the matrix deposited by Sertoli- myoid cell co-cultures, Sertoli cells were more cuboidal and supported some germ cells but did not allow them to differentiate. After 3 wk however, the Sertoli cells flattened to resemble those grown on plastic. In contrast, the Sertoli cells grown on top of the reconstituted basement membrane formed polarized monolayers virtually identical to Sertoli cells in vivo. They were columnar with an elaborate cytoskeleton. In addition, they had characteristic basally located tight junctions and maintained germ cells for at least 5 wk in the basal aspect of the monolayer. However, germ cells did not differentiate. Total protein, androgen binding protein, transferrin, and type I collagen secretion were markedly greater when Sertoli cells were grown on the extracellular matrices than when they were grown on plastic. When Sertoli cells were cultured within rather than on top of reconstituted basement membrane gels they reorganized into cords. After one week, tight junctional complexes formed between adjacent Sertoli cells, functionally compartmentalizing the cords into central (adluminal) and peripheral (basal) compartments. Germ cells within the cords continued to differentiate. Thus, Sertoli cells cultured on top of extracellular matrix components assume a phenotype and morphology more characteristic of the in vivo, differentiated cells. Growing Sertoli cells within reconstituted basement membrane gels induces a morphogenesis of the cells into cords, which closely resemble the organ from which the cells were dissociated and which provide an environment permissive for germ cell differentiation.