Acute and chronic liver failure is associated with high mortality. The enormous regenerative potential of the liver has generated a lot of attention. We undertook this work to assess the two-tier regenerative response in liver failure by immunohistochemistry and to correlate such response with liver histology in acute liver failure (ALF), acute-on-chronic liver failure (ACLF), and decompensated cirrhosis (CHD). Histological examination and immunohistochemical analysis of proliferating hepatocytes and activated hepatic progenitor cells (HPCs) were performed on the liver tissue of patients with ALF (25), ACLF (70), and CHD (70). Comparative analysis of regenerative markers and correlation with histological parameters were done in ALF, ACLF, and CHD. Hepatocytes proliferated significantly more in ALF in comparison to ACLF (p < 0.001) and CHD (p < 0.001). HPC proliferation was significantly higher in ACLF (p < 0.001) and CHD (p < 0.001) than in ALF. ACLF patients showed the highest HPC proliferation and differentiation. Significantly more intermediate hepatocytes were found in ACLF than in ALF and CHD (p < 0.001). Marked parenchymal replacement by fibrosis and/or necrosis correlated significantly with activation of HPC in ACLF (p = 0.01, odds ratio (OR) 4.95) and in CHD (p = 0.05, OR 4.19). The study of liver regeneration in human acute and chronic liver failure suggests that hepatocyte proliferation, providing the first line of regeneration response, is most active in ALF whereas HPC activation, the second line of defense, is more prominent in ACLF. More HPC differentiate to hepatocytes in ACLF than in CHD, reflecting better regenerative potential in ACLF.