The Wilms' tumor suppressor WT1 is a transcriptional regulator present in the fetal but not in the mature liver. Its expression and functional role in liver diseases remains unexplored. In this study, we analyzed WT1 expression by reverse–transcription polymerase chain reaction (RT–PCR) and by immunohistochemistry in normal and diseased livers. In addition, we performed in vitro studies in isolated rat hepatocytes to investigate WT1 regulation and function. We detected WT1 messenger RNA (mRNA) in 18% of normal livers, 17% of chronic hepatitis with minimal fibrosis, 49% of chronic hepatitis with bridging fibrosis, and 71% of cirrhotic livers. In cirrhosis, WT1 immunoreactivity was localized to the nucleus of hepatocytes. WT1 mRNA abundance correlated inversely with prothrombin time (P = .04) and directly with serum bilirubin (P = .002) and with the MELD score (P = .001) of disease severity. In rats, WT1 expression was present in fetal hepatocytes and in the cirrhotic liver but not in normal hepatic tissue. In vitro studies showed that isolated primary hepatocytes express WT1 when stimulated with transforming growth factor β (TGF–β) or when the cells undergo dedifferentiation in culture. Moreover, we found that WT1 down–regulates hepatocyte nuclear factor 4 (HNF–4), a factor that is essential to maintain liver function and metabolic regulation in the mature organ. Hepatic expression of HNF–4 was impaired in advanced human cirrhosis and negatively correlated with WT1 mRNA levels (P = .001). In conclusion, we show that WT1 is induced by TGF–β and down–regulates HNF–4 in liver cells. WT1 is reexpressed in the cirrhotic liver in relation to disease progression and may play a role in the development of hepatic insufficiency in cirrhosis.