Mesenchyme is generally believed to play critical roles in "secondary induction" during organogenesis. Because of the complexity of tissue interactions in secondary inductions, however, little is known about the precise mechanisms at the cellular and molecular levels. We have demonstrated that, in mouse oviductal development, the mesenchyme determines the fate of undetermined epithelial cells to become secretory or cilial cells. We have established a model for studying secondary induction by establishing clonal epithelial and mesenchymal cell lines from perinatal p53(-/-) mouse oviducts. The signal sequence trap method collected candidate molecules secreted from mesenchymal cell lines. Naive epithelial cells exposed to Follistatin-like-1 (Fstl1), one of the candidates, became irreversibly committed to expressing a cilial epithelial marker and differentiated into ciliated cells. We concluded that Fstl1 is one of the mesenchymal factors determining oviductal epithelial cell fate. This is a unique demonstration that the determination of epithelial cell fate is induced by a single diffusible factor.