The fetal liver, the major site of hematopoiesis during embryonic development, acquires additional functions near birth. Among the important liver functions is the response to xenobiotic exposure due to expression of several cytochromes P450 (CYP) and drug efflux transporters. Expression of these genes is regulated by nuclear receptors such as the pregnane X receptor (PXR). In this study, regulation of xenobiotic responses during fetal liver development was analyzed using a fetal hepatocyte primary culture system derived from embryonic day 15 (E15) livers. Hepatocyte nuclear factor (HNF) 4alpha regulates the expression of many genes preferentially in the liver. Expression of several xenobiotic response genes as well as HNF4alpha was increased in fetal hepatocytes stimulated by the hepatic maturation factors oncostatin M (OSM) and Matrigel. To determine the contribution of HNF4alpha to xenobiotic responses in the fetal liver, fetal hepatocytes containing floxed HNF4alpha alleles were cultured and the HNF4alpha gene was inactivated by infection with an adenovirus containing the Cre gene. Expression of CYP3A11 and PXR was suppressed by inactivation of HNF4alpha. An HNF4alpha binding site was characterized in the PXR promoter and found to be required for activation of the PXR promoter in fetal hepatocytes. In conclusion, HNF4alpha is the key transcription factor regulating responses to xenobiotics through activation of the PXR gene during fetal liver development.