The differentiation of hepatocytes and biliary epithelial cells has been histochemically analyzed with anti-calf cytokeratin antiserum in the fetal mouse liver. Almost all young fetal hepatocytes transiently express bile-duct-specific cytokeratin; subsequently, the strong staining of the cytokeratin is confined to progenitor cells of intrahepatic biliary epithelial cells around portal veins. These results suggest that all fetal hepatocytes are bi-potent in terms of the differentiation of mature hepatocytes and intrahepatic bile-duct cells, and that the microenvironment around portal veins plays an important role in bile-duct differentiation. Large periportal hepatocytes continue to stain weakly for cytokeratin until 2 weeks after birth, although the number of positive hepatocytes decreases with development. The differentiation of bile ducts from periportal hepatocytes may continue for 2 weeks after birth.