Fetal hepatocytes in primary culture are cells capable to carry out both proliferation and differentiation processes simultaneously. Previous studies have shown that these cells respond to mitogens, such as hepatocyte growth factor (HGF) or epidermal growth factor (EGF), inducing the expression of early genes, such as fos and myc. The transforming growth factor-beta (TGF-beta) family is one of the most influential groups of growth and differentiation factors. In this report, we show that TGF-beta 1 inhibits fetal hepatocyte proliferation, arresting these cells at G1 phase of the cell cycle. In addition, TGF-beta down-regulates the mitogen-induced myc early expression. However, TGF-beta has no effect on the expression of other protooncogenes, such as fos and H-ras. In addition to its inhibitory role on fetal hepatocyte growth, TGF-beta increases the mRNA levels of fibronectin, an extracellular matrix protein, and maintains the expression of some liver specific genes, such as albumin and alfafetoprotein, above control values. The analysis of the expression of some hepatocyte transcriptional factors has shown that TGF-beta increases HNF1 alpha and HNF1 beta mRNA levels. We conclude that TGF-beta may modulate liver growth and differentiation throughout fetal development.