CHEF/18 is a diploid Chinese hamster cell line of embryonic origin, which is fibroblastic in structure, but behaves like a mesenchymal stem cell line in its ability to differentiate into adipocytes, myoblasts, and chondrocytes. With these cells, adipocyte formation has been divided experimentally into two stages: (i) determination of pre-adipocytes, which have lost the ability to form other cell types while retaining their fibroblast structure; and (ii) commitment or terminal differentiation, in which lipids accumulate, adipocyte structure develops, and cells lose the ability to divide. This paper reports that the first stage can be induced by exposure to 5-azacytidine or 2'-deoxy-5-azacytidine, drugs that also induce CHEF cells to form other mesenchymal cell types, or by growth with added insulin. Pre-adipocytes are distinguished from CHEF stem cells by (i) their inability to form other mesenchymal cell types; and (ii) their rapid accumulation of lipid in response to added insulin. The possibility is discussed that both insulin and the cytidine analogs promote differentiation by the same mechanism, namely changes in the pattern of DNA methylation.