The liver has enormous regenerative capacity. Following acute liver injury, hepatocyte division regenerates the parenchyma but, if this capacity is overwhelmed during massive or chronic liver injury, the intrinsic hepatic progenitor cells (HPCs) termed oval cells are activated. These HPCs are bipotential and can regenerate both biliary epithelia and hepatocytes. Multiple signalling pathways contribute to the complex mechanism controlling the behaviour of the HPCs. These signals are delivered primarily by the surrounding microenvironment. During liver disease, stem cells extrinsic to the liver are activated and bone-marrow-derived cells play a role in the generation of fibrosis during liver injury and its resolution. Here, we review our current understanding of the role of stem cells during liver disease and their mechanisms of activation.