Peroxisome proliferators, such as the lipid-lowering fibrates that function as agonists for peroxisome proliferator-activated receptor alpha (PPARalpha), induce liver tumors in rodents and may produce cholestasis in humans. Considerable attention has focused on peroxisome proliferator-induced hepatocellular carcinoma, a phenomenon not noted in man, whereas limited studies examine fibrates and other therapeutic drugs that induce cholestasis, a common finding in humans. Moreover, the mechanisms by which fibrates induce hepatocyte proliferation and cholestasis are still not fully understood. We have examined the role of hepatocyte retinoid X receptor alpha (RXRalpha), an essential partner of PPARalpha, in modulating WY-14,643-induced hepatocyte proliferation and cholestasis. WY-14,643 treatment induced hepatomegaly in wild type (WT) mice that was also accompanied by induction of the expression of cyclins D1, D3, A2, and B1 and Cdc2 as well as inhibition of Wee 1. Such changes were either absent or greatly reduced in hepatocyte RXRalpha-null mice. Furthermore, neither WY-14,643 treatment nor RXRalpha deficiency affected apoptosis, indicating the importance of PPARalpha/RXRalpha in regulating Wee 1-mediated Cdc2/cyclin B1 expression for cells to enter into mitosis. WY-14,643 treatment also induced cholestasis and liver injury, which is evidenced by induction of alanine aminotransferase, alkaline phosphatase, and hepatic bile acid levels in WT mice. Hepatocyte RXRalpha deficiency protected the mice from WY-14,643-induced liver injury. WY-14,643-mediated induction of the small heterodimer partner, Mrp3, and Cyp3a11 levels was greater in hepatocyte RXRalpha-null than in WT mouse livers suggesting enhanced repression of bile acid synthesis and increased efflux of bile acids into blood for renal excretion as well as hydroxylation of bile acids because of hepatocyte RXRalpha deficiency. These data establish a crucial role of hepatocyte RXRalpha in regulating WY-14,643-mediated cell cycle progression as well as bile acid homeostasis.