We took advantage of the proliferative and permissive environment of the developing pre-immune fetus to develop a noninjury human-rat xenograft small animal model, in which the in utero transplantation of low-density mononuclear cells (MNCs) from human umbilical cord blood (hUCB) into fetal rats at 9-11 days of gestation led to the formation of human hepatocyte-like cells (hHLCs) with different cellular phenotypes, as revealed by positive immunostaining for human-specific alpha-fetoprotein (AFP), cytokeratin 19 (CK19), cytokeratin 8 (CK8), cytokeratin 18 (CK18), and albumin (Alb), and with some animals exhibiting levels as high as 10.7% of donor-derived human cells in the recipient liver. More interestingly, donor-derived human cells stained positively for CD34 and CD45 in the liver of 2-month-old rat. Human hepatic differentiation appeared to partially follow the process of hepatic ontogeny, as evidenced by the expression of AFP gene at an early stage and albumin gene at a later stage. Human hepatocytes generated in this model retained functional properties of normal hepatocytes. In this xenogeneic system, the engrafted donor-derived human cells persisted in the recipient liver for at least 6 months after birth. Taken together, these findings suggest that the donor-derived human cells with different cellular phenotypes are found in the recipient liver and hHLCs hold biological activity. This humanized small animal model, which offers an in vivo environment more closely resembling the situations in human, provides an invaluable approach for in vivo investigating human stem cell behaviors, and further in vivo examining fundamental mechanisms controlling human stem cell fates in the future. (c) 2007 Elsevier Inc. All rights reserved.