Hepatocytes and non-parenchymal liver cells were isolated from adult rat liver and co-cultured for 48 hours as a monolayer on polystyrene culture dishes. The ability of tyrosine aminotransferase (TAT) induction in hepatocytes was examined in the presence of dexamethasone and dibutyryl cAMP. Non-parenchymal cells greatly enhance the ability of TAT induction of hepatocytes. A soluble factor with molecular weight of more than 10,000 is responsible for this enhancement, because conditioned medium prepared from non-parenchymal cells is also stimulatory. Non-parenchymal cells restored the ability in hepatocytes damaged with the addition of D-galactosamine. Conditioned medium prepared from non-parenchymal cells treated with D-galactosamine had higher activity of enhancement than the medium from normal cells. The soluble factor might be released in response to some signal of injury. Hepatocytes and non-parenchymal cells were immobilized within Ca-alginate, and although immobilized hepatocytes rapidly lost the ability to induce TAT, hepatocytes co-immobilized with non-parenchymal cells maintained the ability during 4 days of culture. These results indicated that non-parenchymal liver cells, as well as hepatocytes, could be used to construct a bioartificial liver support system.