Separated thyroid follicles maintained in suspension culture can be used to study the properties of thyroid epithelium in the virtual absence of other cell types and to study the effect of extracellular materials on the follicles. They can be prepared by enzymatic separation of thyroid into single cells followed by reaggregation of the epithelial cells and also by collagenase treatment of thyroids to release follicles and sheets of epithelia that can be separated from other materials by differential filtration. The follicles can exist with normal orientation or inverted (inside out). The follicles are inverted in the presence of high serum concentrations (5%) but can have normal orientation when embedded in a type I collagen gel, even at high serum concentrations. When normally oriented follicles invert, the polarity of the epithelial cells reverses while they are connected to neighbors. During inversion, bipolar cells are observed having microvilli- bearing surfaces at both lumen and medium. Inverted follicles can revert to normal orientation when embedded in collagen gel. Various functional properties of normally oriented follicles are similar to those of follicles in vitro. However, inverted follicles do not concentrate iodide, although they synthesize thyroglobulin and secrete it into the medium. Mutants are available in established cell lines. They have functional and organizational properties that differ from those of normal cells and demonstrate a lack of coupling between functional properties and organization. Inverted follicles transport water from medium into the lumen, although at rates somewhat less than MDCK cells