The molecular identities of functional chloride channels in hepatocytes are largely unknown. We examined the ClC-3 chloride channel in rat hepatocytes and found that mRNA for two different isoforms is present. A short form is identical to the previously reported sequence for rat ClC-3, and a long form contains a 176-bp insertion immediately upstream of the translation initiation site. This predicts a 58-amino acid NH(2) terminal insertion. Both long and short form mRNA was expressed in diverse tissues of the rat. Transient transfection of the long form in CHO-K1 cells resulted in currents with an I(-) > B(-) > Cl(-) selectivity sequence, outward rectification, and inactivation at positive voltages. Short form currents had identical ionic selectivity but displayed a more extreme outward rectification and showed no voltage-dependent inactivation. Immunofluorescence and immunoblots localized native ClC-3 preferentially but not exclusively to the canalicular membrane. We have therefore identified a new isoform of rat ClC-3 and shown that expression of both isoforms produces functional channels. In hepatocytes, ClC-3 is located in association with the canalicular membrane.