The transplantation of somatic cell nuclei to enucleated eggs has shown that genes can be reprogrammed to an embryonic pattern of expression, thereby indicating a reversal of their epigenetic state. However, in Xenopus nuclear transfer experiments using both endoderm and neuroectoderm donor cells, we have observed substantial overexpression of donor cell type-specific genes, both spatially and temporally, in the wrong cell type in some nuclear transplant embryos. For example, more than half of the embryos prepared from transplanted neuroectoderm nuclei overexpressed the neuroectodermal marker gene Sox2 to an excessive level in their endoderm cells. Because, in Xenopus, there is no transcription for the first 12 cell cycles, some somatic cell nuclei must remember a developmentally activated gene state and transmit this to their mitotic progeny in the absence of the conditions that induced that state. We also find that donor cell-specific genes are transcribed at an earlier stage than normal in an inappropriate cell type. This phenomenon of epigenetic memory applies to genes that are transcribed in donor nuclei; it does not influence those genes that are competent to be transcribed in nuclear transplant embryo tissue, but were not actually transcribed in donor nuclei at the time of nuclear transfer. We conclude that an epigenetic memory is established in differentiating somatic cells and applies to genes that are in a transcriptionally active state.