The molecular mechanism underlying the extinction of lipoprotein lipase (LPL) expression in rat liver during development was investigated. A mouse (BWTG3) and a rat (7777) hepatoma, both of which exhibit characteristics of fetal hepatocytes, were found to contain LPL mRNA, whereas the more differentiated human (Hep G2 and Hep 3B) or rat (Fa32) hepatoma cell lines did not. Somatic cell hybrids between LPL-producing hepatoma cells and non-LPL-producing cells, such as adult rat hepatocytes or fibroblasts, exhibited extinction of LPL gene expression. Assay of expression of nested deletions in the 5' regulatory sequences of the LPL gene in the Hep G2 cell line and in BWTG3 cells localized sequences involved in the suppression of LPL production to a region between -591 and -288 relative to the transcription initiation site. A site with sequence homology to a glucocorticoid responsive element (GRE) was shown not to play an important role in the extinction process. A novel transcription factor, termed RF-1-LPL, was shown to bind to an NF-1-like site in this region. In contrast to neonatal animals, in adult animals an additional protein complex (RF-2-LPL), was formed on the NF-1-like site, suggesting that this sequence might recruit a trans-acting factor involved in the extinction of LPL gene expression in adult rat liver.