Both plasticity and cell fusion have been suggested to have a role in germ-layer switching. To understand the mechanisms underlying cell fate changes, we have examined a highly enriched population of hematopoietic stem cells (HSCs) in vitro or in vivo in response to injury for liver-specific phenotypic and functional changes. Here we show that HSCs become liver cells when cocultured with injured liver separated by a barrier. Chromosomal analyses and tissue-specific gene and/or protein expression show that microenvironmental cues rather than fusion are responsible for conversion in vitro. We transplanted HSCs into liver-injured mice and observed that HSCs convert into viable hepatocytes with increasing injury. Notably, liver function was restored 2-7 d after transplantation. We conclude that HSCs contribute to the regeneration of injured liver by converting into functional hepatocytes without fusion.