Previous studies have established that, under appropriate conditions, fetal rat hepatocytes will differentiate in culture. This is characterized by the acquisition and loss of enzyme markers which are observed during liver development in vivo. The expression of alpha-fetoprotein (AFP), which declines during normal development, is examined in cultured hepatocytes derived from 15- and 19-day gestation rats. Secretion of AFP and relative levels of AFP mRNA and gene transcription were measured. Initially, AFP expression was greater in 15-day gestation hepatocytes, and in both instances AFP secretion and AFP mRNA decreased during culture. The decline in AFP expression by 15-day gestation fetal hepatocytes in vitro was not significantly altered by various manipulations of the culture conditions. It is proposed that cultured fetal hepatocytes continue to differentiate in vitro by repressing AFP expression while the expression of other liver-specific genes is being initiated. The fetal hepatocyte culture model therefore adequately reflects in vivo changes in developmentally regulated liver-specific genes.