Normal keratinocytes proliferate when cultured in medium with 0.02-0.10 mM calcium and terminally differentiate when medium calcium is increased to greater than 0.1 mM. In contrast, neoplastic keratinocyte cell lines maintain the potential for continued cell renewal and survive when external calcium is increased. In order to determine whether elevation of extracellular calcium produced changes in intracellular free calcium (Cai) levels, Cai was measured in individual living keratinocytes by use of the fluorescent calcium probe fura-2. Most normal keratinocytes responded to increased extracellular calcium by a gradual 2- to 3-fold increase in Cai lasting for at least 28 min. A subpopulation displayed a sharp peak of Cai at 2 min. In contrast, the Cai level in neoplastic cells in either low or high calcium medium was 2- to 3-fold higher than that in normal cells, and all cells in the population showed a transient 4- to 9-fold elevation of Cai 2 min after external calcium was increased. Thus normal and neoplastic keratinocytes differ in the level of Cai under low calcium conditions and in their response to elevated external calcium. The regulation of Cai in keratinocytes may be important in determining their potential for terminal differentiation.