Derivation of hepatocytes from stem cells has been established through various protocols involving growth factor (GF) and small molecule (SM) agents, among others. However, mesenchymal stem cell-based derivation of hepatocytes still remains expensive due to the use of a cocktail of growth factors, and a long duration of differentiation is needed, thus limiting its potential clinical application. In this study, we developed a chemically defined differentiation strategy that is exclusively based on SM and takes 14days, while the GF-based protocol requires 23-28days. We optimized a stage-specific differentiation protocol for the differentiation of rat bone marrow-derived mesenchymal stem cells (MSCs) into functional hepatocyte-like cells (dHeps) that involved four stages, i.e., definitive endoderm (DE), hepatic competence (HC), hepatic specification (HS) and hepatic differentiation and growth. We further generated hepatic tissue using human decellularized liver extracellular matrix and compared it with hepatic tissue derived from the growth factor-based protocol at the transcriptional level. dHep, upon transplantation in a rat model of acute liver injury (ALI), was capable of ameliorating liver injury in rats and improving liver function and tissue damage compared to those in the ALI model. In summary, this is the first study in which hepatocytes and hepatic tissue were derived from MSCs utilizing a stage-specific strategy by exclusively using SM as a differentiation factor.