Our forefathers in pathology, on observing cancer tissue under the microscope in the mid-19th century, noticed the similarity between embryonic tissue and cancer, and suggested that tumors arise from embryo-like cells [Recherches dur le Traitement du Cancer, etc. Paris. (1829); Editoral Archiv fuer pathologische Anatomie und Physiologie und fuer klinische Medizin 8 (1855) 23]. The concept that adult tissues contain embryonic remnants that generally lie dormant, but that could be activated to become cancer was later formalized by Cohnheim [Path. Anat. Physiol. Klin. Med. 40 (1867) 1-79; Virchows Arch. 65 (1875) 64] and Durante [Arch. Memori ed Osservazioni di Chirugia Practica 11 (1874) 217-226], as the "embryonal rest" theory of cancer. An updated version of the embryonal rest theory of cancer is that cancers arise from tissue stem cells in adults. Analysis of the cellular origin of carcinomas of different organs indicates that there is, in each instance, a determined stem cell required for normal tissue renewal that is the most likely cell of origin of carcinomas [Lab. Investig. 70 (1994) 6-22]. In the present review, the nature of normal stem cells (embryonal, germinal and somatic) is presented and their relationships to cancer are further expanded. Cell signaling pathways shared by embryonic cells and cancer cells suggest a possible link between embryonic cells and cancer cells. Wilm's tumors (nephroblastomas) and neuroblastomas are presented as possible tumors of embryonic rests in children. Teratocarcinoma is used as the classic example of the totipotent cancer stem cell which can be influenced by its environment to differentiate into a mature adult cell. The observation that "promotion" of an epidermal cancer may be accomplished months or even years after the initial exposure to carcinogen ("initiation"), implies that the original carcinogenic event occurs in a long-lived epithelial stem cell population. The cellular events during hepatocarcinogenesis illustrate that cancers may arise from cells at various stages of differentiation in the hepatocyte lineage. Examples of genetic mutations in epithelial and hematopoietic cancers show how specific alterations in gene expression may be manifested as maturation arrest of a cell lineage at a specific stage of differentiation. Understanding the signals that control normal development may eventually lead us to insights in treating cancer by inducing its differentiation (differentiation therapy). Retinoid acid (RA) induced differentiation therapy has acquired a therapeutic niche in treatment of acute promyelocytic leukemia and the ability of RA to prevent cancer is currently under examination.