Stem cells responsible for maintenance and repair of tissues are found in a number of organs. The liver's remarkable capacity to regenerate after hepatectomy or chemical-induced injury does not involve proliferation of stem cells. However, recent studies suggest that liver stem cells exist in both embryonic and adult livers. Using fluorescence-activated cell sorting and a culture system in which primitive hepatic progenitor cells form colonies, a novel class of cells with the marker profile c-Met⁺CD49f^+/lowc-Kit(-)CD45^-TER119^- was found in the developing liver. This class apparently represents the population of cells that form colonies containing distinct hepatocytes and cholangiocytes. When cells in this class are transplanted into the spleen or liver of mice subjected to liver injury, the cells migrate and differentiate into liver parenchymal cells and cholangiocytes that are morphologically and functionally indistinguishable from their native counterparts. During mid-gestation, hematopoietic cells migrate into the liver from a region bounded by aorta, gonad, and mesonephros and produce oncostatin M (OSM). In combination with glucocorticoid hormones, OSM induces maturation of liver stem and progenitor cells, including those of the c-Met⁺CD49f^+/lowc-Kit^-CD45^-TER119^- class. The ability to manipulate the proliferation and differentiation of liver stem cells in vitro will greatly aid in analyzing mechanisms of liver development and offers promise in stem cell therapy of liver diseases.