Natural chimerism, the fusion between genetically distinct conspecifics, is a process known to occur in various marine benthic invertebrates. Sponges (phylum Porifera) have proven to be a useful model to study the origin and evolution of allorecognition. Like some other invertebrates, they display an ontogenetic shift in their allorecognition response: genetically different individuals can fuse during early development, but, in most instances, not as adults. However, there is a limited understanding of the cellular organisation of sponge chimeras and the onset of this allorecognition response, which prevents integration of incompatible genotypes. Here we follow the behaviours and fates of cells derived from genetically distinct larvae of the demosponge Amphimedon queenslandica that have fused together at metamorphosis. By labelling individual larvae with different fluorescent dyes, we can follow cell movement in the postlarval chimeras. We observed that cells from the two individuals readily mixed for 2 weeks after the initial fusion. After that time, differently labelled cells began to sort into different postlarval cellular territories, with one lineage giving rise to choanocytes and the other to pinacocytes and cells of the mesohyl. These results suggest that a rapid ontogenetic shift in the allogeneic response of A. queenslandica occurs about 2 weeks after the initiation of metamorphosis and that the molecular basis of this response is also involved in creating differential cell affinities that underlie the construction of the sponge body plan. Compatible with this proposition is the observation that cells from postlarvae that are allowed to develop for 2 weeks before contact do not fuse and form a distinct boundary between genotypes. The successful chimeras remained stable for the duration of the experiment (3 weeks) raising the possibility that reproductive chimeras might persist in the natural environment, with a single genotype giving rise to germ cells.