Recent investigations indicate that telomerase activity regulates the life span of cells by compensating for telomere shortening during DNA replication. In addition, as differentiation progresses, telomerase activity is reduced in several different cell lineages. These findings lend support to the theory that more immature cells have greater remaining proliferative capacity and longer life span. However, it has not been directly demonstrated that the differentiation along a hepatocytic or a bile ductal lineage is accompanied by reduction of telomerase activity. In this study, we present direct evidence that telomerase activity is reduced during hepatocytic and biliary epithelial differentiation by using our unique cell lines including a stem‐like cell line, ETK‐1. When hepatocytic differentiation was induced in ETK‐1 by 5‐azacytidine, telomerase activity decreased significantly. Similarly, when we compared the telomerase activity on SSP‐25 and RBE cell lines from the same origin but representing different maturation stages of cholangiocarcinoma, more mature cells were found to possess significantly lower activity. These results indicate that the generally accepted relationship between telomerase activity and differentiation stage also applies in the hepatocytic and biliary epithelial lineages. Copyright © 2001 John Wiley & Sons, Ltd.