The existence of a liver stem cell population has only gained credence recently, following the results of animal experiments. These cells are thought to reside in the terminal bile ductules (canals of Hering). Hepatocyte division is responsible for liver regeneration after most causes of injury. However, stem cells may contribute to hepatocyte regeneration, or even take over this role if the liver injury is severe and associated with an impairment of hepatocyte proliferation as in cirrhosis or submassive/massive necrosis, due to drugs, toxins or viruses. "Oval" cells are the descendants of the stem cells and are found in the portal and periportal regions in experimental animals within days of the liver injury. These cells proliferate to form narrow ductules, which may stain positively for biliary cytokeratins CK 19, and radiate out into the damaged parenchyma. Both in vitro and in vivo animal studies now suggest that oval cells can differentiate into bile ductular cells or hepatocytes to allow repopulation of the injured liver. As the oval cells differentiate into hepatocytes they may show positive staining for pyruvate kinase isoenzyme L-PK, albumin and alpha-fetoprotein. There is also growing evidence that bone marrow stem cells may contribute to liver regeneration. The possible involvement of hepatic stem cells in the development of dysplastic nodules, hepatocellular carcinoma and cholangiocarcinoma has been suggested but remains highly controversial. Oval cell isolation and culture techniques, together with stem cell transplantation strategies, may in the future provide novel treatments for individuals with inherited and acquired hepatic disorders.