Cancer stem cells represent a minor population of a tumor and have the property of self-renewal. Although there are many reports demonstrating the presence of cancer stem cells in various tumors, the origin of cancer stem cells is still unknown. The purpose of this study is to develop an efficient system for cell fusion study and to demonstrate the spontaneous fusion of normal stem cells with cancer cells in vitro or in vivo. To detect and select the fused cells efficiently, mouse hepatoma cells transfected with beta-actin promoter-cherry fluorescent protein gene and puromycin resistant protein gene (BC-Hepa cells) were fused with mouse embryonic stem cells with albumin promoter-green fluorescence protein reporter gene and neomycin resistant gene (AG-ES cells) by forming embryoid body (EB) for in vitro fusion or by injecting into nude mice for in vivo fusion. The fusion of AG-ES cells with BC-Hepa cells occurred efficiently in vivo rather than in vitro. The fused cells expressed ALB, GFP, CFP, PECAM, and HNF4 but did not express OCT4. The fused cells induced the formation of tumor comparable to the tumor formed by BC-Hepa cells. This study demonstrated that cancer cells can fuse with stem cells in vivo, which suggest a possibility that the fusion of cancer cells with stem cells can generate cancer stem cells.