Rat hepatocytes de-differentiate and proliferate when cultured on collagen-coated dishes in a chemically defined Hepatocyte Growth Medium in the presence of hepatocyte growth factor and epidermal growth factor. The addition of biomatrix derived from Engelbreth-Holm-Swarm (EHS) mouse sarcoma stops this process and leads to re-differentiation of the cells. We monitored DNA binding activity and protein levels of CCAAT/Enhancer Binding Proteins (C/EBPs) during these events by electrophoretic mobility shift assays and western blot analysis. We used plasma protein gene expression as a marker for the proliferation and differentiation phases. During the initial proliferation phase the DNA binding activity of C/EBPs decreased about 5-10 fold, mainly due to reduction of C/EBPa protein to nearly undetectable levels. Addition of EHS-gel prevented the further loss of C/ΕΒΡα protein and established a new steady state level. Since C/EBP proteins were affected to a much lesser extent, the C/EBPa: C/EBP ratio was greater in the presence of EHS-gel. Transferrin, o^-antitrypsin, and albumin mRNA expression increased substantially. Thus stabilized C/ΕΒΡα expression, an increased C/EBPa: C/EBP ratio, and increased expression of liver specific mRNAs all correlated with the transition of proliferative to differentiated cells.