BACKGROUND: In culture, isogenic mammalian cells typically display enduring phenotypic heterogeneity that arises from fluctuations of gene expression and other intracellular processes. This diversity is not just simple noise but has biological relevance by generating plasticity. Noise driven plasticity was suggested to be a stem cell-specific feature. RESULTS: Here we show that the phenotypes of proliferating tissue progenitor cells such as primary mononuclear muscle cells can also spontaneously fluctuate between different states characterized by the either high or low expression of the muscle-specific cell surface molecule CD56 and by the corresponding high or low capacity to form myotubes. Although this capacity is a cell-intrinsic property, the cells switch their phenotype under the constraints imposed by the highly heterogeneous microenvironment created by their own collective movement. The resulting heterogeneous cell population is characterized by a dynamic equilibrium between "high CD56" and "low CD56" phenotype cells with distinct spatial distribution. Computer simulations reveal that this complex dynamic is consistent with a context-dependent noise driven bistable model where local microenvironment acts on the cellular state by encouraging the cell to fluctuate between the phenotypes until the low noise state is found. CONCLUSIONS: These observations suggest that phenotypic fluctuations may be a general feature of any non-terminally differentiated cell. The cellular microenvironment created by the cells themselves contributes actively and continuously to the generation of fluctuations depending on their phenotype. As a result, the cell phenotype is determined by the joint action of the cell-intrinsic fluctuations and by collective cell-to-cell interactions.