Hepatocellular carcinoma almost always arises in chronically inflamed livers. We developed a culture model to study the role of non-parenchymal cells (NPCs) for inflammation-driven hepatocarcinogenesis. Rats were treated with the carcinogen N-nitrosomorpholine, which induced initiated hepatocytes expressing the marker placental glutathione-S-transferase (GSTp). After 21 days two preparations of hepatocytes were made: (i) conventional ones (Hep-conv) containing NPCs and (ii) hepatocytes purified of NPCs (Hep-pur). Initiated hepatocytes, being positive for GSTp (GSTp-pos) were present in both preparations and were cultured along with normal hepatocytes, being negative for GSTp (GSTp-neg). Under any culture condition DNA synthesis was approximately 4-fold higher in GSTp-pos than in GSTp-neg hepatocytes demonstrating the inherent growth advantage of the first stages of hepatocarcinogenesis. Hepatocytes showed approximately 3-fold lower rates of DNA synthesis in Hep-pur than in Hep-conv, which was elevated above Hep-conv levels by addition of NPC or NPC-supernatant. Pretreatment of NPCs with proinflammatory lipopolysaccharide (LPS) further increased DNA synthesis. Thus, NPCs release soluble growth stimulators. Next we investigated the effect of specific cytokines produced by NPCs. Tumour necrosis factor alpha and interleukin 6 barely altered DNA synthesis, whereas hepatocyte growth factor (HGF), keratinocyte growth factor (KGF) and the heparin-binding epidermal growth factor-like growth factor (HB-EGF) were potent inducers of DNA replication in both, GSTp-neg and GSTp-pos cells. In conclusion, DNA synthesis of hepatocytes is increased by factors released from NPCs, an effect augmented by LPS-stimulation. NPC-derived cytokines, such as KGF, HGF and HB-EGF, stimulate DNA synthesis preferentially in initiated hepatocytes, presumably resulting in tumour promotion. Similar mechanisms may contribute to carcinogenesis in human inflammatory liver diseases.