Cranial neural crest‐derived ectomesenchymal cells are multipotential progenitors that contribute to various tissue types during embryogenesis. Their potential to be expanded in culture as a monolayer and to be induced into different cell lineages in vitro has not been previously reported in detail. In this study, the ectomesenchymal cells in the first branchial arch were enzymatically isolated from the mandibular processes of BALB/c mice and were maintained in an intact state in a medium containing leukaemia inhibitory factor. Here, we first evaluated the proliferative activity of the cells after the third passage, using bromodeoxyuridine labelling and in situ hybridization of telomerase mRNA. Positive staining for expression of HNK‐1, S‐100 and vimentin confirmed that the population of stem cells originated from the ectomesenchyme, which did not express cytokeratin. Then we investigated the molecular and cellular characteristics of the ectomesenchymal cells during their differentiation towards neurogenic, endothelial, myogenic and odontogenic lineages. Expression of multiple lineage‐specific genes and proteins was detected by utilizing a range of molecular and biochemical approaches when the cells were transferred to inductive medium. Histological and immunohistochemical analysis of the induced cells at various intervals indicated obvious phenotypic alteration and presence of specific proteins for the differentiated lineages, for example nestin, factor VIII, α‐SMA and dentin sialophosphoprotein (DSPP), respectively. Correlatively, results of reverse transcription–PCR corroborated at mRNA level the expression of the characteristic molecules during differentiation. Therefore, it is suggested that the ectomesenchymal cells derived from the first branchial arch may represent a novel source of multipotential stem cells capable of undergoing expansion and variant differentiation in vitro.