Acute phase proteins (APPs) are predominantly synthesized in the liver and play an important role in restoring homeostasis. In the present study, we set out to answer two questions using transdifferentiated hepatocytes induced from pancreatic cells as a model for studying the acute phase response. Firstly, do transdifferentiated hepatocytes express acute phase proteins following culture with glucocorticoid and cytokines? Secondly, what is the molecular basis of the induction of acute phase proteins in transdifferentiated hepatocytes? Hepatic transdifferentiation was induced in 11.5-day mouse embryonic pancreas or the pancreatic cell line AR42J-B13 (B13) by culture with dexamethasone. We found that acute phase proteins [alpha2-macroglobulin (MG), haptoglobin (Hp)] were induced in both systems following culture with dexamethasone. The combined treatment of dexamethasone and oncostatin M (OSM) enhanced the expression of the acute phase proteins in B13 cells and the mechanism of the up-regulation by the cytokine is probably mediated by phosphorylation of STAT3 and STAT1. In addition, ectopic expression of either C/EBPbeta or C/EBPalpha in B13 cells induced haptoglobin expression and culture with oncostatin M was sufficient to enhance the expression of haptoglobin in C/EBPbeta transfected cells from 18% to 43%. The results of the present study indicate transdifferentiated hepatocytes have the potential to be a useful model to study liver function in vitro.