The activation of hepatic stellate cell (HSC) is a common pathway leading to hepatic fibrosis. However, the molecular mechanisms underlying HSC activation remain obscure. To elucidate the nature of the HSC activation, we investigated the expression of E-cadherin and its switch to N-cadherin during rat HSC activation, in vivo and in vitro. Immunohistochemical and immunocytochemical staining were performed to identify the expressions of E-cadherin, N-cadherin, and beta-catenin in rat HSCs, in vivo and in vitro. Serial changes in the expressions of these adhesion molecules during the spontaneous activation of cultured rat HSCs were also demonstrated by RT-PCR and by immunoblotting. E-cadherin and beta-catenin were expressed on opposing cell membranes of GFAP-positive rat HSCs and adjacent hepatocytes in vivo, and between desmin-positive rat HSCs in vitro. With the progression of rat HSC activation in tissue and in culture, E-cadherin disappeared gradually, whereas N-cadherin appeared at the cell periphery. The results of RT-PCR and immunoblotting were concordant with immunocytochemistry findings. In conclusion, resting rat HSCs express E-cadherin and beta-catenin both in vivo and in vitro, and E-cadherin switches to N-cadherin during HSC activation. These results suggest that HSC activation represents transdifferentiation from an epithelial to a mesenchymal phenotype.