Fetal hepatic stem/progenitor cells, called hepatoblasts, play central roles in liver development; however, the molecular mechanisms regulating the phenotype of these cells have not been completely elucidated. Matrix metalloproteinase (MMP)-14 is a type I transmembrane proteinase regulating pericellular proteolysis of the extracellular matrix and is essential for the activation of several MMPs and cytokines. However, the physiological functions of MMP-14 in liver development are unknown. Here we describe a functional role for MMP-14 in hepatic and biliary differentiation of mouse hepatoblasts. MMP-14 was upregulated in cells around the portal vein in perinatal stage liver. Formation of bile duct-like structures in MMP-14 deficient livers was significantly delayed compared with wild-type livers in vivo. In vitro biliary differentiation assays showed that formation of cholangiocytic cysts derived from MMP-14 deficient hepatoblasts was completely impaired, and that overexpression of MMP-14 in hepatoblasts promoted the formation of bile duct-like cysts. In contrast, the expression of molecules associated with metabolic functions in hepatocytes, including hepatic nuclear factor 4 alpha and tryptophan 2,3-dioxygenase, were significantly increased in MMP-14 deficient livers. Expression of the epidermal growth factor receptor and phosphorylation of mitogen-activated protein kinases were significantly upregulated in MMP-14 deficient livers. We demonstrate that MMP-14 mediated signaling in fetal hepatic progenitor cells promotes biliary luminal formation around the portal vein and negatively controls the maturation of hepatocytes. (C) 2015 Elsevier Inc. All rights reserved.