Hepatocyte transplantation may provide a new approach for treating a variety of liver diseases if a sufficient number of the transplanted cells survive over an extended time period. In this report, we describe a technique to deliver growth factors to transplanted hepatocytes to improve their engraftment. Epidermal growth factor (EGF) was incorporated (0.11%) into microspheres (19 +/- 12 mu m) fabricated from a copolymer of lactic and glycolic acid using a double emulsion technique. The incorporated EGF was steadily released over 1 month in vitro, and it remained biologically active, as determined by its ability to stimulate DNA synthesis, cell division, and long-term survival of cultured hepatocytes. EGF-containing microspheres were mixed with a suspension of hepatocytes, seeded onto porous sponges, and implanted into the mesentery of two groups of Lewis rats. The first group of animals had their portal vein shunted to the inferior vena cava prior to cell transplantation (portal-caval shunt = PCS), and the second group of animals did not (non-PCS). This surgical procedure improves the survival of transplanted hepatocytes. The engraftment of transplanted hepatocytes in PCS animals was increased twofold by adding EGF microspheres, as compared to adding control microspheres that contained no growth factors. Devices implanted into non-PCS animals had fewer engrafted hepatocytes than devices implanted into PCS animals, regardless of whether blank or EGF-containing microspheres were added. These results first indicate that it is possible to design systems which can alter the microenvironment of transplanted hepatocytes to improve their engraftment. They also suggest that hepatocyte engraftment is not improved by providing single growth factors unless the correct environment (PCS) is provided for the transplanted cells.