When hepatocyte regeneration after a two-thirds partial hepatectomy (PH) in rats is blocked by oral gavage of acetylaminofluorene, a proliferation of ductular cells ensues that results in a profusion of neoductules radiating from each portal tract. To examine the possibility that this population of newly emerging cells harbors cells capable of differentiating into hepatocytes, we have looked in these cells for expression of functional markers of hepatocyte commitment at both the RNA and protein levels. Expression of albumin and α-fetoprotein (α-FP) messenger RNA (mRNA) transcripts were sought in situ using antisense riboprobes, and the expression of a number of cytochrome P450 enzymes was examined immunohistochemically. Before any signs of differentiation the ductular cells strongly expressed cytokeratins 7, 8, 18, and 19 in the same manner as authentic bile ducts, but unlike the latter also expressed vimentin. In situ hybridization studies showed that small bile ducts close to the limiting plate, as well as the newly formed ducts, expressed albumin and α-fetoprotein messenger RNAs, and immunocytochemistry showed that the distribution of the respective proteins was similar. Beginning at 1 week after partial hepatectomy, areas of differentiation could be found in the new ducts, with cells resembling either columnar intestinal-type epithelia or hepatocytes. Intestinal-like cells expressed neither albumin, α-FP, nor cytochrome P450 enzymes, whereas ductular cells appearing like hepatocytes with the typical membranous distribution of cytokeratin 8 strongly expressed a variety of cytochrome P450 enzymes normally associated with functional hepatocytes. These observations further support the belief that reactive ductules, sprouted from small ducts, can represent an adaptive response of the liver to replenish lost hepatocytes, although some of the newborn cells appear to differentiate along intestinal lines. (HEPATOLOGY 1995; 22:1243–1253.).