Widely accessible small animal models suitable for the study of hepatitis C virus (HCV) in vivo are lacking, primarily because rodent hepatocytes cannot be productively infected and because human hepatocytes are not easily engrafted in immunodeficient mice.We report here on a novel approach for human hepatocyte engraftment that involves subcutaneous implantation of primary human fetal hepatoblasts (HFH) within a vascularized rat collagen type I/human fibronectin (rCI/hFN) gel containing Bcl-2-transduced human umbilical vein endothelial cells (Bcl-2-HUVEC) in severe combined immunodeficient X beige (SCID/bg) mice. Maturing hepatic epithelial cells in HFH/Bcl-2-HUVEC co-implants displayed endocytotic activity at the basolateral surface, canalicular microvilli and apical tight junctions between adjacent cells assessed by transmission electron microscopy. Some primary HFH, but not Huh-7.5 hepatoma cells, appeared to differentiate towards a cholangiocyte lineage within the gels, based on histological appearance and cytokeratin 7 (CK7) mRNA and protein expression. Levels of human albumin and hepatic nuclear factor 4alpha (HNF4alpha) mRNA expression in gel implants and plasma human albumin levels in mice engrafted with HFH and Bcl-2-HUVEC were somewhat enhanced by including murine liver-like basement membrane (mLBM) components and/or hepatocyte growth factor (HGF)-HUVEC within the gel matrix. Following ex vivo viral adsorption, both HFH/Bcl-2-HUVEC and Huh-7.5/Bcl-2-HUVEC co-implants sustained HCV Jc1 infection for at least 2 weeks in vivo, based on qRT-PCR and immunoelectron microscopic (IEM) analyses of gel tissue.The system described here thus provides the basis for a simple and robust small animal model of HFH engraftment that is applicable to the study of HCV infections in vivo