The role of a putative liver stem cell in liver regeneration and carcinogenesis is reviewed. There is increasing evidence that there is a liver stem cell that has the capacity to differentiate into parenchymal hepatocytes or into bile ductular cells. These stem cells may be activated to proliferate after severe liver injury or exposure to hepatocarcinogens. They are not activated by moderate liver injury, which is repaired by proliferation of mature heaptocytes. Exposure to most chemical hepatocarcinogens results in proliferation of a small morphologically indistinct cell population termed “oval cells.” These cells have been shown to have the capacity to differentiate into hepatocytes or into ductular cells. The origin of these cells appears to be from transition duct cells, but there is also evidence of an even less mature periportal liver stem cell. Study of the development of these cells during carcinogenesis indicates that liver cancer arises from oval cells by aberrant differentiation of stem cells.