The post-implantation rat embryo culture technique is employed to study embryotoxic effects of xenobiotic compounds in the absence of the maternal compartment. For compounds biotransformed in vivo the embryo culture technique must be adapted in order to mimick the in vivo effects. In the present study the possibility of co-culturing metabolically active maternal hepatocytes suspended in the standard culture system with rat serum as a medium was investigated. Cyclophosphamide (CP) was used as a model compound as it needs bioactivation to display embryotoxicity. Morphologic and histologic effects were studied. Neither hepatocytes nor CP alone affected embryo development, whereas in the presence of hepatocytes embryotoxicity was observed at 30 micrograms/ml CP. Embryotoxicity was decreased in the additional presence of metyrapone, a monoxygenase inhibitor. Hepatocyte suspensions prepared via slicing or perfusion of livers were equally effective. In conclusion, co-culture of embryos and suspended hepatocytes can be performed under optimal conditions for embryo development and in the presence of biotransforming activity.