Hepatocytes of transgenic mouse fetuses harboring SV40 virus transforming gene sequences in the SV delta e-MGH fusion gene construct 202 driven by the mouse metallothionein (MT-I) enhancer [R. D. Palmiter, H. Y. Chen, A. Messing, and R. L. Brinster (1985) Nature (London) 316, 457-460] were cultured at Day 19 of gestation and established as a differentiated line expressing albumin and alpha-fetoprotein (AFP) mRNAs. Hepatocyte line FMH-202 contains integrated SV40 sequences, expresses SV40 T-antigen genes, and exhibits unlimited growth potential because it has been cultured 18 months without apparent decrease in cell viability or in growth rate that could suggest the occurrence of a crisis period. Immortalized cells multiply in chemically defined medium deficient in arginine with transferrin plus insulin, whereas EGF, insulin, and transferrin are obligatory requirements for fetal or newborn mouse hepatocyte multiplication in primary cultures. Cells did not grow in agar and were not tumorigenic in nude mice. Their immortalized, nonmalignant phenotype was further documented by low saturation densities of confluent monolayers showing no overgrowth, and by growth arrest in the absence of insulin with subsequent induction of DNA synthesis and resumption of cell growth in response to insulin. Thus, it appears that immortalized SV40 T-antigen-expressing hepatocytes are present in the liver of the transgenic mice. However, at later points in liver development the transforming activity of T-antigen becomes apparent and leads to hepatocellular carcinoma formation in vivo.