Exact cosmological solutions are obtained for a five-dimensional inhomogeneous fluid distribution along with a Brans–Dicke type of scalar field. The set includes varied forms of matter field including ρ+p = 0, where p is the 3D isotropic pressure. Depending on the signature of 4-space curvature, our solutions admit of indefinite expansion in the usual 3-space and dimensional reduction of the fifth dimension. Due to the presence of the scalar field, the case p = -ρ does not yield an exponential expansion of the scale factor, which strikingly differs from our earlier investigations without scalar field. The effective four-dimensional values of entropy and matter are calculated and possible consequences of entropy and matter generation in the 4D world as a result of dimensional reduction of the extra space are also discussed. It is encouraging to point out that aside from the well known big bang singularity, our inhomogeneous cosmology is spatially regular everywhere. Further, our model seems to suggest an alternative mechanism pointing to a smooth pass over from a primordial, inhomogeneous cosmological phase to a 4D homogeneous one.