A large number of hepatoma cell lines has been used to study expression and regulation of liver-specific function. However these cells, even the most differentiated, are morphologically far from hepatocytes. In no case is the typical hepatocyte cell polarity well maintained. Cell hybridization has been used as a potential means for turning on specific genes. From hybrids between well differentiated Fao rat hepatoma cells and WI 38 human fibroblasts, we have attempted to isolate segregated cells that are highly differentiated and polarized. Such cells, detected in aged cultures of only one hybrid (WIF12), were isolated by subcloning. One subclone, WIF12-1 was analyzed. Expression of liver-specific functions extinguished in the original hybrid is restored in all WIF12-1 cells at a very high level, similar to that of hepatocytes and 5-30 times higher that that of parental cells. Moreover human genes coding for liver-specific proteins (albumin, fibrinogen, and alcohol dehydrogenase) are actively expressed. WIF12-1 cells have acquired a polarized phenotype as attested by the presence of bile canaliculi between adjacent cells and by the asymmetrical localization of apical (Mg(2+)-ATPase, gamma-glutamyl transpeptidase) and basolateral membrane markers. The bile canaliculi formed are dynamic and functional structures, characterized by long periods of expansion followed by rapid contractions. The ability to polarize is a general and permanent property of WIF12-1 cells. These cells appear to constitute a valid model for the in vitro study of hepatocyte cell polarity, membrane domain formation and mechanisms of membrane protein sorting.