Recently carcinoembryonic antigen (CEA) has been functionally identified in vitro as a cell adhesion protein. Identification of its function in vivo requires knowing how CEA mRNA is transcribed in intact tissues. For this purpose, 16 cases of colon adenocarcinomas and autologous normal colon were studied by quantitative in situ hybridization for the expression of CEA mRNA. Normal colonic crypts displayed an upward gradient of mRNA expression. In colon carcinoma, tumor cells at the deep invading front of the tumor contain 2.6 times more CEA mRNA than tumor cells near the luminal surface. Immunoelectron microscopy showed intercellular CEA. In normal colon and colonic carcinoma, changes in CEA mRNA were paralleled by similar gradients in CEA protein, consistent with a transcriptional regulation of CEA expression. A new in vivo model of CEA function is presented to account for this overexpression of CEA occurring at sites characterized by changes in cell adhesion. The model requires that secreted CEA inhibits cell adhesion mediated by cell-bound CEA.