The aim of the present study was to examine the effects of mesenchyme on the cytodifferentiation of the Dunning tumor (DT, R3327), a transplantable rat prostatic adenocarcinoma developed spontaneously from the dorsolateral prostate of a Copenhagen rat. Small pieces of DT were combined with mesenchyme of the rat urogenital sinus (18-day fetal, UGM) or seminal vesicle (0-day neonatal, SVM). Both types of combinations were grown under the kidney capsule of male athymic nude mice for 4 weeks. At harvest, the tissue recombinants were fixed and processed for electron microscopy. Grafts of parental DT were similarly processed for electron microscopy. The tumor was characterized by tubules lined by 2-3 layers of undifferentiated cells lacking secretory granules. The basal lamina was reduplicated, and epithelioid cells traversing gaps in the basal lamina were frequently observed. The stroma was composed of a mixture of fibroblastic and large epithelioid cells derived from the ductal lining epithelium through a process of micrometastasis. In UGM or SVM+DT combinations the mesenchyme influenced the differentiation and secretory activity of the DT epithelium. The induced DT epithelial cells exhibited a well-developed granular endoplasmic reticulum, a large Golgi apparatus and prominent secretory granules which were never observed in the parental DT. The basal lamina returned to normal, while the incidence of micrometastasis was decreased. The collagen content of the stroma was increased with a concurrent appearance of smooth muscle cells surrounding those tubules where secretory cytodiff erentiation had occurred. While the mechanism involved in the mesenchyme-induced change in cytodiff erentiation remains unknown, it is evident that the DT epithelial cells when associated with normal embryonic or neonatal mesenchyme can express a more normal cytodifferentiation and function. It is concluded (a) that the DT cells can be induced by mesenchyme to express more highly differentiated ultrastructural patterns and secretory cytodifferentiation, (b) that the induced secretory cytodifferentiation is associated with a reduction in invasiveness (micrometastasis) and a more normal-appearing basal lamina and (c) that the increased abundance of collagen fibers and the differentiation of smooth muscle in the stromal compartment are associated with secretory cytodifferentiation suggesting that reciprocal epithelial-mesenchymal interactions are involved in the regulation of the pathobiology of the DT.