Because of a donor shortage problem in liver transplantation, cell transplantation has been anticipated as a useful bridge or substitute therapy, and has necessitated the development of cell sources other than donated organs. Therefore, the use of fetal hepatic progenitor cells (HPCs) is now being focused on. In this study, we intended to establish an efficient ex vivo nonviral gene-transfer system using a newly developed isolation and culture system for mouse fetal HPCs. Fetal HPCs, characterized using immunocytochemistry and reverse-transcription polymerase chain reaction (RT-PCR) for lineage markers, were collected from E13.5 Balb/c mice using change in size because of cell aggregation by their homophilic cell-to-cell binding occurring during suspension culture. Optimal conditions for culture and ex vivo gene transfection for fetal HPCs were determined by 3H-thymidine incorporation and the expression efficacy of transfected red fluorescent protein (DsRed) gene in different culture media. The optimum timing for gene transfection was also evaluated. To evaluate the in vivo expression of the transferred gene, DsRed-transferred fetal HPCs were transplanted into 70% partially hepatectomized allogenic mice. The highest efficacy of DsRed gene transfection into fetal HPCs in vitro (45% ± 12.3%) was achieved with culture media, which also enabled the highest 3H-thymidine incorporation, containing the deleted form of hepatocyte growth factor (dHGF) and insulin, and when transfection was performed immediately after isolation. In vivo DsRed expression in fetal HPCs was maintained concomitantly with albumin expression even after HPC transplantation. In conclusion, we established a highly efficient in vitro gene transfer system for mouse fetal HPCs using a newly developed isolation and culture system. (HEPATOLOGY2002;36:1488–1497).