Since stem cells can differentiate into hepatocyte, stem cell-based therapy becomes a potential alternative treatment for terminal liver diseases. However, an appropriate source of human mesenchymal stem cells (hMSCs) for hepatocytes has not yet been clearly elucidated. The aim of the present study was to investigate the in vitro biological characterization and hepatic differentiation potential of human amniotic fluid-derived mesenchymal stem cells (AF-hMSCs) and human bone marrow-derived mesenchymal stem cells (BM-hMSCs). Our results show that AF-hMSCs possess higher proliferation and self-renewal capacity than BM-hMSCs. Cytogenetic studies indicate that AF-hMSCs are as genetically stabile as BM-hMSCs. Following incubation with specific hepatogenic agents, AF-hMSCs showed a higher hepatic differentiation potential than BM-hMSCs. Expression of several liver-specific markers was significantly greater in AF-hMSCs than in BM-hMSCs, as shown by real time RT-PCR and immunofluorescence (IF). In conclusion, AF-hMSCs possess superior potential for hepatic differentiation, making them more suitable for diverse terminal liver diseases.