The role of cell sorting in the reorganization of Hydra cell reaggregates was studied. We quantitatively labeled ectodermal and endodermal cells by incubating whole animals in fluorescent beads or by injecting the beads into the gastric cavity. Beads were stably incorporated into the cells by phagocytosis. Our data show that dramatic cell sorting processes drive the formation of ectoderm and endoderm within the first 12 hr of reaggregation. After the ectoderm is established, no further rearrangement could be observed. We also tested the ability of cells to sort out with respect to their original position in Hydra by dissociating labeled apical and basal pieces of Hydra and measuring the clumping of labeled cells during reorganization. There was no increase in the clumping of cells during reorganization indicating that cell sorting is not involved in the formation of early activation centers. There was also no preferential incorporation of apically derived (presumptive head) tissue into tentacles that subsequently formed, indicating that after dissociation into single cells there is no predisposition of erstwhile presumptive head tissue to form heads.