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Formation of intrahepatic bile ducts (IHBDs) proceeds in accordance with their microenvironment. Particularly, mesenchymal cells around portal veins regulate the differentiation and ductular morphogenesis of cholangiocytes in the developing liver; however, further studies are needed to fully understand the arrangement of IHBDs into a continuous hierarchical network. This study aims to clarify the interaction between biliary and liver mesenchymal cells during IHBD formation. To identify candidate factors contributing to this cell–cell interaction, mesenchymal cells were isolated from embryonic day 16.5 matrix metalloproteinase 14 (MMP14)‐deficient (knockout [KO]) mice livers, in which IHBD formation is retarded, and compared with those of the wild type (WT). WT mesenchymal cells significantly facilitated the formation of luminal structures comprised of hepatoblast‐derived cholangiocytes (cholangiocytic cysts), whereas MMP14‐KO mesenchymal cells failed to promote cyst formation. Comprehensive analysis revealed that expression of vasoactive intestinal peptide (VIP) was significantly suppressed in MMP14‐KO mesenchymal cells. VIP and VIP receptor 1 (VIPR1) were mainly expressed in periportal mesenchymal cells and cholangiocytic progenitors during IHBD development, respectively,  in vivo . VIP/VIPR1 signaling significantly encouraged cholangiocytic cyst formation and up‐regulated tight junction protein 1, cystic fibrosis transmembrane conductance regulator, and aquaporin 1,  in vitro . VIP antagonist significantly suppressed the tight junction assembly and the up‐regulation of ion/water transporters during IHBD development  in vivo . In a cholestatic injury model of adult mice, exogenous VIP administration promoted the restoration of damaged tight junctions in bile ducts and improved hyperbilirubinemia.  Conclusion:  VIP is produced by periportal mesenchymal cells during the perinatal stage. It supports bile duct development by establishing tight junctions and up‐regulating ion/water transporters in cholangiocytes. VIP contributes to prompt recovery from cholestatic damage through the establishment of tight junctions in the bile ducts.

Vasoactive Intestinal Peptide Derived From Liver Mesenchymal Cells Mediates Tight Junction Assembly in Mouse Intrahepatic Bile Ducts