Although high blastocyst rates can be achieved in somatic cell nuclear transfer, abortions and developmental abnormalities still hamper advancement. Reliable and practical methods to evaluate early embryonic development and differentiation are required to understand and overcome the problem. Our aim was to establish an in vitro culture system for monitoring posthatching development (PHD). Slaughterhouse-derived bovine oocytes were matured in vitro, fertilized (Day 0) and cultured (Holm et al., 1999, Theriogenology, 52, 683–700). On Day 8, degenerated embryos were removed from each well and 400 L of modified culture medium (SOFaaci plus 0.5% glucose and 10% fetal bovine serum) were added. At Day 11, hatched blastocysts were selected by scoring them as Quality 1 (Q1: > 1.0 mm, clear trophoblast, compact inner cell mass), Quality 2 (Q2: 0.5 mm, dark spots in the trophoblast, less compact inner cell mass), or Quality 3 (Q3: < 0.5 mm, many dark spots in the trophoblast, spread inner cell mass). The resulting 304 blastocysts in 12 replicates were then loaded into 15 mm × 1.2 gel tunnels of 2.4% agarose in PBS, supplemented with either 5% (Agar5) or 10% (Agar10) fetal bovine serum, covered with the modified culture medium, and then incubated at 38.5°C in 5% CO₂, 5% O₂, 90% N₂. Embryo morphology and length were evaluated using a stereomicroscope on Days 12, 13, 14 and 15. On Day 14, 75 embryos were removed, biopsed (1 mm) for sex determination of each embryo, and processed for light and transmission electron microscopy. Qualitative and quantitative data were analyzed by χ² test and GLM procedure of SAS, respectively, with P level of 0.05. A total of 170 embryos (56% of total) initiated elongation. This percentage was higher (LSmeansSD, n = 12; P < 0.05) in Agar10 v. Agar5 in both Q1 (889 v. 637), Q2 (667 v. 485) and Q3 embryos (529 v. 278). Mean embryo length (mm; LSmeansSEM) on Day 13 was higher (P < 0.05) in Q1 (2.10.2, n = 49) and Q2 (1.71.4, n = 98) than Q3 (1.20.3, n = 23). On Day 14, Q1 embryos (3.50.2) were longer (P < 0.01) than Q2 and Q3 embryos (2.70.1 and 2.00.3). On Day 15, Q1, Q2 and Q3 embryos (4.40.5, n = 24, 4.00.3, n = 45 and 2.90.6, n = 14, respectively) had similar length, probably influenced by the low number of Q3 embryos. The percentage of males was higher (P < 0.001) in Q1 (95%; n = 40), but similar in Q2 (39%; n = 26) and Q3 (71%; n = 7). Light microscopy confirmed hypoblast and epiblast formation. Ultrastructural analysis revealed that the latter had penetrated the trophoblast (Rauber’s layer), forming an embryonic disc including many degenerative cells. In conclusion, this culture system represents the first model for rapid growth, elongation, and initial differentiation of bovine posthatching embryos.