Hepatocytes from donor transgenic mice that produce an easily assayable circulating marker have been used to develop a novel hepatocyte transplantation system. Isolated G7 HBV transgenic donor hepatocytes secreting HBsAg were transplanted into congeneic or allogeneic mouse recipients. Serum HBsAg was present three days after hepatocyte transplantation in congeneic animals and persisted indefinitely when hepatocytes were transplanted into the spleen. Transplanted hepatocytes within the splenic pulp were identified by morphologic and histochemical analysis. Migration of hepatocytes injected into the spleen to the liver was demonstrated by in situ hybridization using an RNA probe for HBsAg. Transplantation into nonimmunosuppressed allogeneic recipients resulted in disappearance of detectable hepatocytes in the spleen within two weeks. This novel transplantation system should facilitate studies of hepatocyte engraftment and survival, modulation of allograft rejection, and development of hepatocyte-directed gene therapy.