Cardiac tissue engineering is an emerging field. The suitability of engineered heart tissue (EHT) for both in vitro and in vivo applications will depend on the degree of syncytoid tissue formation and cardiac myocyte differentiation in vitro, contractile function, and electrophysiological properties. Here, we demonstrate that cardiac myocytes from neonatal rats, when mixed with collagen I and matrix factors, cast in circular molds, and subjected to phasic mechanical stretch, reconstitute ring-shaped EHTs that display important hallmarks of differentiated myocardium. Comparative histological analysis of EHTs with native heart tissue from newborn, 6-day-old, and adult rats revealed that cardiac cells in EHTs reconstitute intensively interconnected, longitudinally oriented, cardiac muscle bundles with morphological features resembling adult rather than immature native tissue. Confocal and electron microscopy demonstrated characteristic features of native differentiated myocardium; some of these features are absent in myocytes from newborn rats: (1) highly organized sarcomeres in registry; (2) adherens junctions, gap junctions, and desmosomes; (3) a well-developed T-tubular system and dyad formation with the sarcoplasmic reticulum; and (4) a basement membrane surrounding cardiac myocytes. Accordingly, EHTs displayed contractile characteristics of native myocardium with a high ratio of twitch (0.4 to 0.8 mN) to resting tension (0.1 to 0.3 mN) and a strong β-adrenergic inotropic response. Action potential recordings demonstrated stable resting membrane potentials of −66 to −78 mV, fast upstroke kinetics, and a prominent plateau phase. The data indicate that EHTs represent highly differentiated cardiac tissue constructs, making EHTs a promising material for in vitro studies of cardiac function and tissue replacement therapy.