One of the major goals of tissue engineering is to establish an integrated organ in vivo. We have previously shown that transfection of vascular endothelial growth factor (VEGF) gene into hepatocytes promotes tissue formation by engrafted cells. Here we show that tissue growth was significantly enhanced by co-transplantation of hepatocyte growth factor (HGF) and tumor necrosis factor-alpha (TNF alpha) gene transfected hepatocytes with VEGF-gene transfected cells, but tissue islands were scattered nonspecifically in the abdomen of mice. The result brought us forward to the next step to establish an integrated mass and structural formation of liver tissue. We entrapped VEGF gene transfected hepatocytes in a nylon mesh bag and intraperitoneally engrafted close to the liver. Three weeks later, the bag was covered by a thick network of blood vessels, compared to the control. Histological examination showed that the blood vessels penetrated the parenchyma of the engrafted bag and formed a well-developed vessel network in the region. The use of hepatocytes from lacZ transgenic mice and PCR analysis demonstrated survival and albumin production by hepatocytes in the engrafted bag. Our model can potentially be developed into a heterotropic artificial liver with direct access to the host blood circulation.