In a healthy adult liver, the rate of cell turnover is very low. Following acute liver injury, restoration of parenchymal mass is achieved by proliferation of normally mitotically quiescent hepatocytes. However, chronic liver injury results in the loss of this proliferative capacity of the hepatocytes, as increasing numbers of cells become senescent. In this situation, there is activation of hepatic progenitor cells from within the intrahepatic biliary tree. These bipotential cells are capable of supplying biliary cells and hepatocytes. In animal models, there is some controversy regarding the relative contribution to parenchymal regeneration from these two compartments, but human studies are compatible with the suggestion that as the severity and chronicity of the liver injury increase, the balance of contribution to regeneration switches from the mature hepatocytes to the immature progenitor cells. We are now beginning to understand the molecular signals and niche requirements that govern their cell fate. Alongside the parenchymal regeneration in chronic liver injury, there is a stereotypical wound-healing response with activation of hepatic stellate cells into scar-forming myofibroblasts and deposition of collagen. This change in the extracellular matrix affects the regenerative capacity of the liver, and excess scar tissue can impair liver regeneration from either hepatocytes or hepatic progenitor cells.