Background and Aims: Expanded donor criteria poses increased risk for late phase complications such as fibrosis that lead to graft dysfunction in liver transplantation. There remains a need to elucidate the precise mechanisms of post-transplant liver damage in order to improve the long-term outcomes of marginal liver grafts. In this study, we aimed to examine the role of oval cells in fibrogenic development of marginal liver grafts and explore the underlying mechanisms.Methods: Using an orthotopic rat liver transplantation model and human post-transplant liver biopsy tissues, the dynamics of oval cells in marginal liver grafts was evaluated by the platform integrating immuno-labeling techniques and ultrastructure examination. Underlying mechanisms were further explored in oval cells and an Aldose reductase (AR) knockout mouse model simulating marginal graft injury.Results: We demonstrated that activation of aldose reductase initiated oval cell proliferation in small-for-size fatty grafts during ductular reaction at the early phase after transplantation. These proliferative oval cells subsequently showed prevailing biliary differentiation and exhibited features of mesenchymal transition including dynamically co-expressing epithelial and mesenchymal markers, developing microstructures for extra-cellular matrix degradation (podosomes) or cell migration (filopodia and blebs), and acquiring the capacity in collagen production. Mechanistic studies further indicated that transition of oval cell-derived biliary cells toward mesenchymal phenotype ensued fibrogenesis in marginal grafts under the regulation of notch signaling pathway.Conclusions: Oval cell activation and their subsequent lineage commitment contribute to post-transplant fibrogenesis of small-for-size fatty liver grafts. Interventions targeting oval cell dynamics may serve as potential strategies to refine current clinical management.