Although transcriptional hierarchies have been extensively studied in invertebrates, their involvement in mammalian cell-type specification is poorly understood. Here we report a hepatocyte transcriptional cascade suggested by the expression patterns of hepatic transcription factors in dedifferentiated hepatomas and hepatocyte: fibroblast hybrids in which the liver phenotype was extinguished. These results indicated that the homeoprotein hepatocyte nuclear factor-1 alpha (HNF-1 alpha), and HNF-4, a member of the steroid hormone receptor superfamily, were regulated coordinately or in a hierarchy by a higher-order locus, independently of other hepatic transactivators. HNF-4 was implicated as an essential positive regulator of HNF-1 alpha, as deletion of an HNF-4 binding site in the HNF-1 alpha promoter abolished promoter activity, and HNF-4 potently transactivated the HNF-1 alpha promoter in cotransfection assays. Moreover, genetic complementation of dedifferentiated hepatomas with HNF-4 complementary DNA rescued expression of endogenous HNF-1 alpha messenger RNA and DNA-binding activity. Our studies therefore define an HNF-4----HNF-1 alpha (4----1 alpha) transcriptional hierarchy operative in differentiated hepatocytes but selectively inhibited by an extinguishing locus and somatic mutations which antagonize the liver phenotype.