Studies on the regulation of differentiation in airway epithelial cells have been hampered by the lack of cell culture systems that differentiate in vitro. One such system that does exhibit differentiation is hamster tracheal epithelial cells (HTE). A major problem with this system, however, is that at the time cells differentiate, they lyze the collagen gel upon which they grow, resulting in termination of the culture. Here we report that by growing the HTE cells at 32° instead of 37°C we can totally prevent lysis of the collagen gel. Cells grown at this lower temperature maintain their differentiated phenotype as evidenced by abundant mucus granules and the secretion of authentic mucus glycoproteins into the culture media. We have also developed a method for subculturing the primary cells which allows growth and differentiation in secondary culture. The HTE cells were capable of being passaged at least three times and did not become transformed as judged by their inability to grow in soft agar and to produce tumors in syngeneic animals. This improved HTE cell culture system will allow detailed studies on the mechanisms which regulate growth, differentiation, and mucus secretion in surface airway epithelial cells.