['Alteration of cell surface proteolysis has been proposed to play a role in liver fibrosis, a grave complication of biliary atresia (BA). In this study we investigated the roles of hepatocyte growth factor activator inhibitor (HAI)-1 and -2 in the progression of BA. The expression levels of HAI-1 and -2 were significantly increased in BA livers compared with those in neonatal hepatitis and correlated with disease progression. In BA livers, HAI-1 and -2 were coexpressed in cells involved in ductular reactions. In other selective cholangiopathies, ductular cells positive for HAI-1 or HAI-2 also increased in number. Inflammatory cytokines, growth factors, and bile acids differentially up-regulated expression of HAI-1 and -2 transcripts in fetal liver cells and this induction could be antagonized by a cyclooxygenase-2 inhibitor. Conditioned media from cell lines stably overexpressing HAI-1 or HAI-2 enhanced the fibrogenic activity of portal fibroblasts and stellate cells, suggesting that both proteins might be involved in liver fibrosis. Because HAI-1 and -2 colocalized in ductular reactions sharing similar features to those observed during normal liver development, we sought to investigate the role of HAI-1 and -2 in cholangiopathies by exploring their functions in fetal liver cells. Knockdown of HAI-1 or HAI-2 promoted bidirectional differentiation of hepatoblast-derived cells. In addition, we showed that the hepatocyte growth factor activator, mitogen-activated protein kinase kinase 1, and phosphatidylinositol 3-kinase signaling pathways were involved in hepatic differentiation enhanced by HAI-2 knockdown.'] Does persistent elevation of hepatocyte growth factor activator inhibitors in cholangiopathies affect liver fibrosis and differentiation?