An understanding of how oncogenes affect differentiated liver functions might lead to improved treatments for liver cancer or other disorders where liver-specific functions are compromised. A retroviral vector that coexpressed β-galactosidase (β-gal) and activated Ras genes (Ras-gal) was transduced into a small fraction of adult rat hepatocytes in vivo. Hepatocytes from Ras-gal-transduced diethylnitrosamine- untreated livers and hepatocellular carcinomas (HCC) from Ras-gal- transduced diethylnitrosamine-treated rats were analyzed for liver functions by performing histochemical assays on liver sections. Ras-gal- transduced hepatocytes failed to express gluconeogenic, ketogenic, and urea pathway enzymes. In contrast, several enzymes involved in fat synthesis were strongly activated, and microvesicular fat accumulated. These metabolic changes are induced in normal livers by insulin, a hormone that activates p21-ras. The deregulation of p21-ras may inhibit these liver-specific functions and may induce fat synthesis in both malignant and nonmalignant liver diseases. Furthermore, treatment with drugs that inhibit the attachment of p21-ras to the plasma membrane might reverse these changes. The alterations in enzymatic functions in the HCCs were similar to those observed in the hepatocytes, although each of the two cancers had a region that abruptly lost its expression of liver-specific enzymes and acquired the expression of genes that are more characteristic of oval or bile ductule cells. This suggests that a single genetic event in a malignant cell may dramatically alter its apparent phenotype. The identification of this putative gene might lead to insights into the regulation of the phenotype of normal cells in the liver.