Freshly isolated adult rat hepatocytes, when cultured on type I collagen (commercially available as Vitrogen), assume a polygonal shape, form a stable monolayer within 24 hours, but lose the capacity to express some liver-specific functions over time in culture. We incubated hepatocytes in a serum-free medium on a reconstituted basement membrane gel, "matrigel" (prepared from an extract of extracellular matrix of the murine Engelbreth-Holm-Swarm sarcoma), and observed that the cells adhered firmly, remained rounded as single cells or clusters, and maintained liver-specific gene expression for more than 1 week in vitro. Hepatocytes on matrigel secreted substantially higher amounts of albumin, transferrin, haptoglobin, and hemopexin, Northern blot analyses of extracted cellular RNA, expressed increased amounts of mRNA for the liver-specific protein albumin (as compared with cells on vitrogen). In cultures treated with phenobarbital, cytochrome P-450b, and cytochrome P-450e, mRNAs and proteins were barely detectable in cells on Vitrogen but were induced to levels similar to those in the liver in vivo in matrigel cultures. Likewise, the use of matrigel greatly enhanced the induction of mRNA and protein for P-450c by 3-methylcholanthrene and for P-450p by steroidal and nonsteroidal inducers. However, neither substratum permitted induction of P-450d by 3-methylcholanthrene, suggesting that the effects of matrigel are selective even for expression in liver of members of the superfamily of cytochrome P-450 genes. Within 5 days in cultures on Vitrogen, hepatocytes expressed detectable amounts of fetal liver aldolase activity and also mRNA for vimentin and type I collagen, each considered a phenotypic change reflecting hepatocyte "dedifferentiation." None of these was present in cells on matrigel. Responsiveness to mitogenic stimuli, as judged by incorporation of 3H-thymidine into DNA, was also decreased in hepatocytes cultured on matrigel. Finally, there was a remarkable increase in the levels of both matrices during the first 2 days in culture. However, the continuously cytoskeleton mRNA over time in culture than did the rounded cells on matrigel. We conclude that hepatocytes cultured on matrigel, as opposed to the standard collagen, exhibit remarkably enhanced expression of many liver-specific functions.