Hepatocyte transplantation (HT) has been performed in patients with liver-based metabolic disease and acute liver failure as a potential alternative to liver transplantation. The results are encouraging in genetic liver conditions where HT can replace the missing enzyme or protein. However, there are limitations to the technique, which need to be overcome. Unused donor livers to isolate hepatocytes are in short supply and are often steatotic, although addition of N-acetylcysteine improves the quality of the cells obtained. Hepatocytes are cryopreserved for later use and this is detrimental to metabolic function on thawing. There are improved cryopreservation protocols, but these need further refinement. Hepatocytes are usually infused into the hepatic portal vein with many cells rapidly cleared by the innate immune system, which needs to be prevented. It is difficult to detect engraftment of donor cells in the liver, and methods to track cells labeled with iron oxide magnetic resonance imaging contrast agents are being developed. Methods to increase cell engraftment based on portal embolization or irradiation of the liver are being assessed for clinical application. Encapsulation of hepatocytes allows cells to be transplanted intraperitoneally in acute liver failure with the advantage of avoiding immunosuppression. Alternative sources of hepatocytes, which could be derived from stem cells, are needed. Mesenchymal stem cells are currently being investigated particularly for their hepatotropic effects. Other sources of cells may be better if the potential for tumor formation can be avoided. With a greater supply of hepatocytes, wider use of HT and evaluation in different liver conditions should be possible.