The BC2 cell line derived from the human hepatocarcinoma, HGB, undergoes a spontaneous sharp differentiation process in culture as it becomes confluent, remains stably differentiated for several weeks, and may return to proliferation thereafter under appropriate density conditions. The relevance of the line as an hepatic model has been evaluated. Cells synthesize a large number of plasma proteins, and rates of glycogen and urea synthesis increase with time of confluency and become sensitive to insulin, reflecting the process of differentiation. Differentiated BC2 cells express the most relevant cytochrome P-450 (CYP) isozyme activities (CYP1A1/2, 2A6, 2B6, 2C9, 2E1, and 3A4) and conjugating enzymes (glutathione S-transferase and UDP-glucuronyltransferase) and also respond to model inducers. Methylcholanthrene induced an increase in CYP1A1/2 enzyme activity (eightfold), phenobarbital induced CYP2B6 activity (1.7-fold), and dexamethasone induced CYP3A4 activity (fivefold). In parallel, expression of the most relevant liver-enriched transcription factors, HNF-4, HNF-1, C/EBP-alpha and C/EBP-beta mRNAs, was significantly increased in differentiated cultures. This increase was largest in HNF-1 and HNF-4, which supports the idea that a redifferentiation process towards the hepatic phenotype takes place. BC2 is an hepatic cell line that is able to express most hepatic functions, especially the drug-biotransformation function, far more efficiently than any previously described human hepatoma cell line.