Chronic liver injury induces liver cirrhosis and facilitates hepatocarcinogenesis. However, the effects of this condition on hepatocyte proliferation and differentiation are unclear. We showed that rodent hepatocytes display a ductular phenotype when they are cultured within a collagenous matrix. This process involves transdifferentiation without the emergence of hepatoblastic features and is at least partially reversible. During the ductular reaction in chronic liver diseases with progressive fibrosis, some hepatocytes, especially those adjacent to ectopic ductules, demonstrate ductular transdifferentiation, but the majority of increased ductules originate from the existing bile ductular system that undergoes extensive remodeling. In chronic injury, hepatocyte proliferation is weak but sustained, and most regenerative nodules in liver cirrhosis are composed of clonally proliferating hepatocytes, suggesting that a small fraction of hepatocytes maintain their proliferative capacity in chronic injury. In mouse hepatocarcinogenesis models, hepatocytes activate the expression of various fetal/neonatal genes, indicating that these cells undergo dedifferentiation. Hepatocyte-specific somatic integration of various oncogenes in mice demonstrated that hepatocytes may be the cells of origin for a broad spectrum of liver tumors through transdifferentiation and dedifferentiation. In conclusion, the phenotypic plasticity and heterogeneity of mature hepatocytes are important for understanding the pathogenesis of chronic liver diseases and liver tumors.