The origin of liver cells from distinct bone marrow stem cells, eg, hematopoietic stem cells or multipotent adult progenitor cells has been recently described using in vitro studies. Cell culture experiments revealed the key role of growth factors and the organ-specific environment for the induction of liver-specific genes. We investigated the in vitro potential of rat mesenchymal stem cells to differentiate into hepatocytic cells in cocultures with isolated rat liver cells. Rat mesenchymal stem cells (MSCs) propagated in culture, and transduced with green fluorescent protein (GFP) were cloned. Cells from selected clones were either cultured under liver-stimulating conditions, using serum free medium supplemented with HGF, EGF, SCF, and FGF-4 alone on fibronectin-coated surfaces, or cocultured with freshly isolated rat liver cells. Cocultured cells were harvested after two weeks and sorted into GFP-positive (GFP+) and GFP-negative (GFP-) cells. RT-PCR for liver specific markers CK-18 and albumin were performed on the different cell populations. After 2 weeks, the specified culture conditions led to the expression of albumin and CK-18 RNA in GFP-positive sorted MSCs from the cocultures, whereas MSCs cultured without liver cells did not express the studied genes. The results indicate, that when cocultured with liver cells MSCs from the bone marrow have the potential to differentiate toward hepatocytic cells in vitro. We conclude that MSC may possess an enhanced capacity to differentiate into functional liver cells. Additionally, environmental factors seem to be crucial for specific and directed differentiation.