Recent work has convincingly demonstrated that adult bone marrow contains cells capable of differentiating into liver epithelial cells in vivo. However, the frequency and time course with which fully functional hepatocytes emerge after bone marrow transplantation remained controversial. Here, we used the fumarylacetoacetate hydrolase knockout mouse to determine the kinetics of hepatocyte replacement after complete hematopoietic reconstitution. Single donor-derived hepatocytes were first detected 7 weeks after lethal irradiation and bone marrow transplantation. Liver disease was not required for this transdifferentiation. In the presence of selective pressure the single cells evolved into hepatocyte nodules by 11 weeks after transplantation and resulted in >30% overall liver repopulation by 22 weeks. The frequency with which hepatocytes were produced was between 10(-4) and 10(-6), resulting in only 50 to 500 repopulation events per liver. Hepatic engraftment was not observed without previous hematopoietic reconstitution even in the presence of liver injury. In addition, significant liver repopulation was completely dependent on hepatocyte growth selection. We conclude that hepatocyte replacement by bone marrow cells is a slow and rare event. Significant improvements in the efficiency of this process will be needed before clinical success can be expected.