Organoid cultures of hepatocytes in the presence of hepatocyte growth factor (HGF) and epidermal growth factor (EGF) display characteristic histologic organization. Biliary epithelium covers the surface of the tissue exposed to the culture medium. Hepatocytes, stellate cells and endothelial cells compose the underlying structures. In order to investigate the origin of the biliary epithelial cells in the organoid cultures, we utilized the retrorsine/DPPIV system of hepatocyte transplantation to create hybrid livers in which clones of DPPIV hepatocytes colonize variable portions of the lobules. We demonstrate that, as others have shown, biliary epithelium in this in vivo system remains that of the recipient (DPPIV negative) rat. Hepatocytes are the only cells positive for the DPPIV marker enzyme in the hybrid livers. Organoid cultures were prepared from the hybrid livers. Overall, 46.82% of the hepatocytes placed into culture were positive for DPPIV at time zero (after isolation). At 21 days in culture, 47.54% of the biliary epithelium on the surface of the organoid cultures was positive for DPPIV. Since the only DPPIV cells inoculated in the cultures were hepatocytes, this finding demonstrates that, in the conditions of the organoid cultures, hepatocytes do undergo phenotypic transition to biliary epithelial cells.