A hierarchy of liver-enriched transcription factors plays an important role in activating expression of many hepatic genes. In particular, hepatocyte nuclear factor 4 (HNF-4) is a major activator of the gene encoding HNF-1, and HNF-1 itself activates expression of more than 20 liver genes. To dissect this activation pathway genetically, we prepared somatic cell variants that were deficient in expression of the liver-specific alpha 1-antitrypsin (alpha 1AT) gene, which requires both HNF-1 and HNF-4 for high-level gene activity. This was accomplished in two steps. First, hepatoma transfectants that stably expressed two selectable markers under alpha 1AT promoter control were prepared; second, variant sublines that could no longer express either transgene were isolated by direct selection. In this report, we demonstrate that the variants contain defects in the HNF-4/HNF-1 activation pathway. These defects functioned in trans, as expression of many liver genes was affected, but the variant phenotypes were recessive to wild type in somatic cell hybrids. Three different variant classes could be discriminated by their phenotypic responses to ectopic expression of either HNF-4 or HNF-1. Two variant clones appeared specifically deficient in HNF-4 expression, as transfection with an HNF-4 expression cassette fully restored their hepatic phenotypes. Another line activated HNF-1 in response to forced HNF-4 expression, but activation of downstream genes failed to occur. One clone was unresponsive to either HNF-1 or HNF-4. Using the variants, we demonstrate further that the chromosomal genes encoding alpha 1AT, aldolase B, and alpha-fibrinogen display strict requirements for HNF-1 activation in vivo, while other liver genes were unaffected by the presence or absence of HNF-1 or HNF-4. We also provide evidence for the existence of an autoregulatory loop in which HNF-1 regulates its own expression through activation of HNF-4.