To target gene expression to malignant hepatic cells, we have constructed recombinant retroviral vectors containing a reporter gene encoding nuclear beta-galactosidase (nls-LacZ) under transcriptional control of regulatory sequences from the rat alpha-fetoprotein (AFP) or human insulinlike growth factor II (IGFII) genes. The AFP and IGFII P3 promoters activate transcription during fetal development and are often reactivated in hepatocellular carcinoma (HCC). Infection of several cultured cell types with the retroviral vector containing the IGFII P3 sequence resulted in expression of the reporter gene in all cell lines tested, including those that do not produce IGFII. In contrast, selective expression was achieved by vectors containing the AFP transcriptional regulatory sequence. Nuclear beta-galactosidase activity was detectable in cells from lines that produce AFP, and not in cells that do not express the AFP gene. In most infected cell lines, retroviral RNA synthesis from the 5' LTR was inhibited, and deletion of the retroviral LTR enhancer did not change expression from either the IGFII P3-nls-LacZ or the AFP-nls-LacZ cassettes. After treatment of cells with 12-O-tetradecanoylphorbol-13-acetate and epidermal growth factor (EGF), the decrease in concentrations of endogenous AFP messenger RNA (mRNA) and nls-LacZ mRNA transcribed from the transferred AFP regulatory sequence were similar. In the context of an integrated provirus, the AFP transcriptional regulatory sequence is therefore subject to similar regulatory control as that of the endogenous gene. These data show that the AFP sequence, and not the IGFII P3 promoter we used, is suitable for targeting gene expression to malignant hepatic cells.