Normal cellular models able to efficiently recapitulate intestinal epithelial cell differentiation in culture are not yet available. The aim of this work was to establish and genetically characterize a mesenchymal-epithelial coculture system to identify transcriptional regulators involved in this process. The deposition of rat intestinal epithelial cells on human intestinal mesenchymal cells led to the formation of clustered structures that expanded shortly after seeding. These structures were composed of polarized epithelial cells with brush borders and cell junction complexes. A rat GeneChip statistical analysis performed at different time points during this process identified hepatocyte nuclear factor-4alpha (HNF-4alpha) and hepatocyte nuclear factor-1alpha (HNF-1alpha) as being induced coincidently with the apparition of polarized epithelial structures. Stable introduction of HNF-4alpha in undifferentiated epithelial cells alone led to the rapid induction of HNF-1alpha and several intestinal-specific markers and metabolism-related genes for which mRNA was identified to be upregulated during epithelial differentiation. HNF-4alpha was capable to transactivate the calbindin 3 gene promoter, a process that was synergistically increased in the presence of HNF-1alpha. When HNF-4alpha-expressing cells were plated on mesenchymal cells, an epithelial monolayer formed rapidly with the apparition of dome structures that are characteristics of vectorial ion transport. Forced expression of HNF-1alpha alone did not result in dome structures formation. In sum, this novel coculture system functionally identified for the first time HNF-4alpha as an important modulator of intestinal epithelial differentiation and offers an innovative opportunity to investigate molecular mechanisms involved in this process.