Embryonic stem (ES) cells are able to differentiate in vitro via embryo-like aggregates, so-called "embryoid bodies", into derivatives of the endodermal, ectodermal and mesodermal lineage. We established standardised protocols for cardiogenesis, myogenesis, neurogenesis and vascular smooth muscle cell differentiation in vitro. The developmentally controlled expression of tissue-specific genes, proteins, ion channel and receptors during ES cell differentiation is the basis of several in vitro approaches: (1) "Loss of function" assays with ES cells containing homozygous mutations of specific genes, (2) "Gain of function" assays with ES cells overexpressing exogenous genes, (3) Developmental analysis of teratogenic/embryotoxic compounds in vitro, (4) Pharmacological assays and the establishment of model systems for pathological cell functions, and (5) The application of differentiation and growth factors for induction of selectively differentiated cells which, in the future, may be used as a source for tissue grafts. We propose the ES cell technology as valuable in vitro system to substitute and reduce the use of animals in basic and applied research.