Hepatic lipocytes were isolated from normal rat liver and established in culture. A virtually pure isolate was obtained by fractionating enzymatically digested liver on a discontinuous gradient of arabinogalactan. Isolated cells displayed prominent rough endoplasmic reticulum and typical cytoplasmic droplets containing vitamin A. Lipocytes in primary culture were shown by immunofluorescence to secrete collagen types I, III, and IV and also laminin. Immunoassay of culture media showed that lipocytes during the first week in culture secrete type I (72.1-86.2% of total measured soluble collagen), type III (2.6-7.2%), and type IV (11.2-29.7%) collagens. Five percent of total secreted protein was collagen compared with 0.2% in similarly cultured hepatocytes and 1.7% in sinusoidal endothelial cells, as measured by the production of peptide-bound [3H]hydroxyproline in cells incubated with [3H]proline. The calculated amount of collagen synthesized by lipocytes per microgram of cellular DNA was 10-fold greater than that produced by hepatocytes and over 20-fold greater than that produced by endothelial cells. The findings indicate that collagen synthesis and secretion are specialized functions of hepatic lipocytes, and that, in cells from normal liver, this represents production primarily of type I collagen. The phenotypic resemblance of these cells to fibroblasts supports the hypothesis that lipocytes are a major source of collagen in pathologic fibrosis and may be precursors of the fibroblast-like cells observed in liver injury.