Cellular distribution of both transcripts and protein of transforming growth factor (TGF)-beta-1 was studied in preneoplastic nodules (6 cases) and primary hepatic carcinomas (16 hepatocellular carcinomas and 2 mixed tumors of hepatocellular carcinoma and cholangiocellular carcinoma) produced by Solt-Farber's protocol in rats using in situ hybridization and immunohistochemistry. The TGF-beta-1 transcripts were primarily observed in nonparenchymal cells, some of which were desmin-positive perisinusoidal cells, surrounding or within the preneoplastic nodules or carcinomas. The distribution of latent TGF-beta-1 protein was similar to the transcripts. However, mature TGF-beta-1, which was identified with CC-antibody, was only detected in nonparenchymal cells and connective tissue associated with carcinomas, but was not observed in preneoplastic nodules or in normal liver with the exception of the periportal space. There was no difference in TGF-beta-1 expression associated with tumor types or the differentiation status of primary hepatic carcinomas. The present study demonstrates that nonparenchymal cells, particularly desmin-positive perisinusoidal cells, are the principal source of TGF-beta-1 production during hepatocarcinogenesis. Furthermore, the data suggest that the close interaction between nonparenchymal cells and carcinoma cells may be necessary for the activation of latent TGF-beta-1. It is hypothesized that regulatory effects of TGF-beta-1 on growth of preneoplastic or carcinoma cells in the liver are exerted via paracrine mechanism.