Oxygen is an important component of the cellular microenvironment, mediating cell survival, differentiation, and function. Oxygen supply is a limiting factor during culture of highly metabolic cells such as hepatocytes. Here we present a simple formulation of a fluorocarbon-based oxygen carrier embedded in collagen gel that increases oxygen concentration in culture 6-fold. Rat hepatocytes cultured on oxygen carrier-collagen showed a significant increase in viability and function. Cytochrome P450IA1 activity was increased by 140% in serum-free cultures and by 820% in serum-containing cultures. The significantly higher hepatocellular function on oxygen carrier-collagen matrix persisted and increased during long-term culture. Long-term albumin secretion was increased by 350% in serum-free cultures and by 166% in serum-containing culture. Long-term urea secretion was increased by 79% in serum-free cultures and by 76% in serum-containing cultures. We conclude that oxygen supply may limit hepatocyte function in vitro. This limitation can be overcome by addition of an oxygen carrier to the extracellular matrix. Culture of hepatocytes on oxygen-carrying matrix mimics the oxygen-rich environment of the liver and provides a simple method for enhanced long-term function.--Nahmias, Y., Kramvis, Y., Barbe, L., Casali, M., Berthiaume, F., Yarmush, M. L. A novel formulation of oxygen-carrying matrix enhances liver-specific function of cultured hepatocytes.