Hydroids, members of the most ancient eumetazoan phylum, the Cnidaria, harbor multipotent, migratory stem cells lodged in interstitial spaces of epithelial cells and are therefore referred to as interstitial cells or i-cells. According to traditional understanding, based on studies in Hydra, these i-cells give rise to several cell types such as stinging cells, nerve cells, and germ cells, but not to ectodermal and endodermal epithelial cells; these are considered to constitute separate cell lineages. We show here that, in Hydractinia, the developmental potential of these migratory stem cells is wider than previously anticipated. We eliminated the i-cells from subcloned wild-type animals and subsequently introduced i-cells from mutant clones and vice versa. The mutant donors and the wild-type recipients differed in their sex, growth pattern, and morphology. With time, the recipient underwent a complete conversion into the phenotype and genotype of the donor. Thus, under these experimental conditions the interstitial stem cells of Hydractinia exhibit totipotency.