Thyroid follicular epithelial cells (E-cells) and parafollicular cells (P-cells) were isolated by a new method from rats pretreated with thyroxine. The dissociated cells were centrifuged on the discontinous gradients of dextran A composed of 8 layers from 5% to 40%. The E-cells were found microscopically to be concentrated in 15% layer, while the P-cells in 25 or 30% layer. Each pellet of two kinds of cells was almost free of contamination by other kind of cells. Only the P-cells were responsible for calcitonin production according to bioassay. Both the isolated E-and P-cells certainly differentiated to reproduce the follicles in the control media-199. The new follicle formation from the isolated E-cells was stimulated by TSH, but not by calcium and iodide. On the other hand, the new follicle formation from the isolated P-cells was also facilitated by calcium, calcium and iodide in combination, or TSH. Especially the combined treatment with calcium and iodide resulted in a remarkable hyperplasia of follicles and the typical hyperfunctional picture with an increase of calcitonin content, but with a negligible ¹³¹I uptake. Calcium, calcium plus iodide and TSH commonly provided the P-cells with the deceptive appearance analogous to the stimulated E-cells. The functions of the both cells were, however, never converted reciprocally during culture under any condition.