It was investigated whether cryopreserved rat liver epithelial cells (RLEC) from biliary origin are capable of undergoing hepatic differentiation upon sequential exposure to liver-specific factors (fibroblast growth factor (FGF)-4, hepatocyte growth factor (HGF), insulin-transferrin-sodium-selenite (ITS), dexamethasone (Dex) and oncostatin M (OSM)), reflecting liver embryogenesis in vivo. As differentiation progressed, cells acquired a hepatic morphology (polygonal-to-cuboidal shaped, binucleated cells), corresponding well with the phenotypic changes observed. Biliary cytokeratin (CK)19 and connexin (Cx)43-expression both gradually decreased; CK19-expression disappeared even completely. In contrast, hepatic CK18-expression persisted throughout the culture time. Hepatocyte nuclear factor (HNF)3beta, alpha-foetoprotein (AFP), transthyretin (TTR), HNF4, albumin (ALB), HNF1alpha, multidrug resistance protein (MRP)2 and Cx32 were expressed at specific stages during RLEC-differentiation, thereby showing a progressive hepatic maturation. Indeed, immature AFP and mature ALB were sequentially expressed, in line with the in vivo liver embryogenesis. Expression of the early and mid-late 'liver-enriched' transcription factors (LETF) HNF3beta and HNF4 declined and translocated to the cytosol, respectively, while the late LETF HNF1alpha underwent a nuclear upregulation. In conclusion, RLEC are bipotent cells, capable of differentiation into immature hepatocytes in a hepatic-stimulating micro-environment. The robustness of the sequential conditions, developed before for hepatic 'transdifferentiation' of rat bone marrow stem cells (rBMSC), was hereby confirmed.