Myofibroblasts derived from portal fibroblasts are important fibrogenic cells in the early stages of biliary fibrosis. In contrast to hepatic stellate cells, portal fibroblasts have not been well studied in vitro, and little is known about their myofibroblastic differentiation. In this article we report the isolation and characterization of rat portal fibroblasts in culture. We demonstrate that primary portal fibroblasts undergo differentiation to α‐smooth muscle actin–expressing myofibroblasts over 10–14 days. Marker analysis comparing portal fibroblasts to hepatic stellate cells demonstrated that these are distinct populations and that staining with elastin and desmin can differentiate between them. Portal fibroblasts expressed elastin at all stages in culture but never expressed desmin, whereas hepatic stellate cells consistently expressed desmin but never elastin. Immunostaining of rat liver tissue confirmed these results in vivo. Characterization of portal fibroblast differentiation in culture demonstrated that these cells required transforming growth factor‐β (TGF‐β): cells remained quiescent in the presence of a TGF‐β receptor kinase inhibitor, whereas exogenous TGF‐β1 enhanced portal fibroblast α‐smooth muscle actin expression and stress fiber formation. In contrast, platelet‐derived growth factor inhibited myofibroblastic differentiation. Portal fibroblasts were also dependent on mechanical tension for myofibroblastic differentiation, and cells cultured on polyacrylamide supports of variable stiffness demonstrated an increasingly myofibroblastic phenotype as stiffness increased. Conclusion: Portal fibroblasts are morphologically and functionally distinct from hepatic stellate cells. Portal fibroblast myofibroblastic differentiation can be modeled in culture and requires both TGF‐β and mechanical tension. (HEPATOLOGY 2007.)