In mature rat hepatocytes in primary culture, many metabolic functions and cell growth are controlled reciprocally by cell density, and this reciprocal regulation is mediated by a cell-surface modulator through cell-cell contact. Cultured RY-121B cells from Reuber hepatoma and MH1Cj cells from Morris hepatoma, which retain some liverspecific functions, did not show any cell-density dependency of either cell growth or hepatocyte-specific functions, such as induction of tyrosine aminotransferase by dexamethasone. However, when RY-121B cells were cocultured with a low density of rat hepatocytes as monolayers in direct contact, they exerted contact-dependent control of DNA synthesis and of differentiated function of the hepatocytes. Furthermore, plasma membranes from various tumor cells including these hepatoma cells had strong modulator activity on primary cultures of normal rat hepatocytes, and their activity mimicked the reciprocal effects of cell density on DNA synthesis and induction of tyrosine aminotransferase. On the contrary, addition of plasma membranes from normal adult rat liver to sparse cultures of RY-121B or MH1Cj cells did not cause any inhibition of active DNA synthesis or enhancement of induction of tyrosine aminotransferase in these cells. These results suggest that hepatoma cells have lost cell density-dependent regulations of many cellular activities and cell growth because they have lost the ability to respond to the cell surface modulator, although they retain modulator activity on their plasma membranes.