Replacement of liver function using extracorporeal bioartificial systems has been attempted with limited success. The instability of the hepatocyte phenotype in vitro has restricted the useful lifetime of these devices. Co-cultivation of hepatocytes with mesenchymal cells is one method that has been widely utilized to stabilize the liver-specific function of isolated cells; however, co-culture has yet to be successfully incorporated in a bioreactor setting. In this study, we probed heterotypic cell interactions in co-cultures of hepatocytes and 3T3 in order to better understand the cellular microenvironment necessary to induce and stabilize liver-specific functions. Using microfabrication and conventional techniques to control the heterotypic interface, the effects of varying degrees of heterotypic interaction on tissue function (albumin and urea synthesis) were examined. Our data indicated maximal induction of liver-specific functions in cultures with maximal initial heterotypic interaction, and that induction of hepatic functions in hepatocytes was increased in the vicinity of fibroblasts as compared to hepatocytes far from the heterotypic interface. Furthermore, our data suggested that heterotypic cell contact is necessary for induction of these functions. These studies will aid in the formation of design criteria for a co-culture based bioartificial liver, as well as provide a useful tool to study the role of heterotypic and homotypic interactions in liver physiology and pathophysiology.