We have established an efficient system for differentiation, expansion and isolation of hepatic progenitor cells from mouse embryonic stem (ES) cells and evaluated their capacity to repopulate the diseased liver upon transplantation using a MUP-uPA/SCID mouse model of liver injury. The FACS-purified hepatic progenitor cells developed into mature hepatocytes without evidence of cell fusion and participated in rebuilding normal parenchyma with reconstitution of liver-specific zonal gradients of hepatic function. The ES cell-derived hepatocytes were responsive to normal growth regulation and proliferated at the same rate as the host hepatocytes after an additional growth stimulus from CCl4-induced liver injury. The transplanted cells also differentiated into biliary epithelial cells. These data demonstrate that a highly enriched population of committed hepatocyte precursors can be generated from mouse ES cells in vitro for effective cell replacement therapy. In addition, we have now established a protocol for generating iPSCs from human fibroblasts by transduction with lentiviruses that independently expressed POU domain class 5 transcription factor 1 (OCT3/4) SRY-box containing gene 2, (SOX2), NANOG homeobox (NANOG), and Lin-28 homolog (LN28). These iPSCs recapitulate both the hepatocytic differentiation and morphological changes seen with the human ES cells. Our current research plans are focused on: (i) detailed biochemical and genomics characterization of the in vitro differentiation of the human ES and iPSCs into hepatocytes including in vivo transplantation (into 1-day old mice , MUP-uPA/SCID mice) to formally test the ability to give rise to differentiated hepatocytes;(ii) development of a protocol for differentiation of ES cells and iPSCs into cholangiocytes based on three dimensional culture conditions that we have developed for cholangiocytic differentiations of adult liver stem cells. The most recent results are derived from the generation of iPSC dfrom hepatic lineage cells at different stages of differentiation (adult hepatocyte, AD and hepatoblast at E16.5, HB) and mouse embryonic fibroblast (MEF) in C57BL/6 mice to identified genes of differentiation stage-specific donor memory related to the efficiency of hepatic differentiation by comparative analysis of transcriptional profiles among iPSC. Here we have addressed the potential importance of th eretention of donor memory in induced pluripotent stem cells (iPSC) that reflect characteristics of original somatic cell and relates to the induction of facile re-differentiation of iPSC into donor cell. It is unclear whether a differentiation stage-specific donor memory effectively modulates the functional properties of iPSC. Here, we showed that iPSC from hepatic cells at the early stage of differentiation, hepatoblast derived-iPSC (HB-iPSC), were vastly superior for hepatic re-differentiation. The facilitated efficiency of re-differentiation into hepatocyte-like cells was strongly associated with HB-iPSC specific genes identified by gene network analyses. Moreover, we found that HB-iPSC retained differentiation stage-specific donor memory which correlated with the function of HB-iPSC specific genes. Our results suggest that lineage-specific donor memory retained in HB-iPSC may play a important role in modulating the ability of hepatic differentiation. The identification of this defined gene set may help to improve hepatic differentiation of iPSC for therapeutic application in liver diseases.