Hepatocyte growth factor/hepatopoietin A is a complete mitogen for parenchymal liver cells, and its expression is increased as an early response to acute liver injury. To identify the liver cell population responsible for hepatocyte growth factor gene expression, we investigated tissue sections and isolated and purified cell fractions from normal rat liver by in situ and Northern blot hybridization. Hepatocyte growth factor transcripts were present in sinusoidal liver cells, which were preferentially located in the periportal parenchyma. Northern hybridization analysis of RNA isolated from purified liver cell fractions demonstrated that HGF messenger RNA is present only in fat‐storing cells. No specific hepatocyte growth factor gene expression was detected in parenchymal cells, endothelial cells and Kupffer cells. Myofibroblast‐like transition of fat‐storing cells, which is linked to fibrogenesis in chronic liver disease, results in the loss of hepatocyte growth factor expression. Hepatocyte growth factor gene expression in the normal liver, a new function of fat‐storing cells, suggests that this growth factor may play a role in the physiological balance between cell death and replacement in the liver and that hepatocyte growth factor may also act in a paracrine manner. Furthermore, loss of hepatocyte growth factor expression in myofibroblast‐like cells derived from fat‐storing cells may be responsible for reduced parenchymal cell regeneration in chronic liver disease. (HEPATOLOGY 1992;15:5‐11).