We developed and characterized a coculture system composed of a fat-storing cell clone (CFSC-2G) and freshly isolated hepatocytes that can reproduce in vitro some of the physical and functional relationships observed in vivo. Hepatocytes in the coculture are polarized, are smaller in size than hepatocytes plated on plastic, maintain a cuboidal shape, and have a tendency to form cords. Fat-storing cells, which are initially extended, retract and leave spaces that resemble liver sinusoids. Both cell types in the coculture system are functional for at least two weeks as determined by the expression of high levels of liver-specific protein mRNAs as well as by the production and secretion of liver-specific proteins into the culture medium. The hepatocytes maintain relatively high levels of asialoglycoprotein receptor on their cell surface and form functional gap junctional complexes with fat-storing cells. Hence, this coculture system retains a number of differentiated functions of hepatocytes, making it a useful model to study cell-cell interactions in culture and to analyze regulation of hepatocyte functions.