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In contrast to adult hepatocytes, fetal hepatocytes (FH) are thought to be highly proliferative, less immunogenic, and resistant to cryopreservation and ischemic injury. These qualities could enhance FH engraftment, proliferation, and gene transfer requiring active DNA synthesis.Rat FH were obtained using the nonperfusion collagenase/DNase digestion method. Free and cultured cells were studied using electron microscopy, fluorescence-activated cell sorting, and Northern analysis usingα-fetoprotein and albumin as markers of hepatocyte lineage. DNA synthetic activity was measured in quiescent and mitogen-stimulated fetal and adult hepatocytes by [3H]thymidine incorporation. Susceptibility of cultured FH to retrovirally mediated gene transfer was studied using an amphotropic retroviral vector carrying theEscherichia coli lac-Z gene. Nagase analbuminemic rats were used as recipients to study the effects of intraportal FH transplantation. Analysis of serum albumin was carried out by enzyme-linked immunosorbent assay.In fetal liver, 87±2% of the cells showed morphological and molecular features of hepatocytes. DNA synthetic activity in nonstimulated cultured FH was 10 times greater than the maximal hepatocyte growth factor-driven response in adult rat hepatocytes. A total of 5-15% FH stained positive for X-gal; results of transduction in adult hepatocyte cultures were negative. In Nagase analbuminemic rat recipients, FH produced significant amounts of albumin only when a hepatic regenerative stimulus was applied. Immunohistochemistry confirmed presence of albumin-positive hepatocytes.Fetal rat liver from the late gestation period is highly enriched with hepatocyte progenitors. They are highly proliferative and susceptible to retroviral transduction and can engraft and function in the adult rat liver if transplanted under a hepatic regenerative stimulus.