We investigated whether transplanted hepatocytes interact with hepatic stellate cells, as cell-cell interactions could modulate their engraftment in the liver. We transplanted Fischer 344 rat hepatocytes into syngeneic dipeptidyl peptidase IV-deficient rats. Activation of hepatic stellate cells was analyzed by changes in gene expression, including desmin and alpha-smooth muscle actin, matrix proteases and their inhibitors, growth factors, and other stellate cell-associated genes with histological methods or polymerase chain reaction. Furthermore, the potential role of hepatic ischemia, Kupffer cells, and cytokine release in hepatic stellate cell activation was investigated. Hepatocyte transplantation activated desmin-positive hepatic stellate cells, as well as Kupffer cells, including in proximity with transplanted cells. Inhibition of Kupffer cells by gadolinium chloride, blockade of tumor necrosis factor alpha (TNF-alpha) activity with etanercept or attenuation of liver ischemia with nitroglycerin did not decrease this hepatic stellate cell perturbation. After cell transplantation, soluble signals capable of activating hepatic stellate cells were rapidly induced, along with early upregulated expression of matrix metalloproteinases-2, -3, -9, -13, -14, and their inhibitors. Moreover, prior depletion of activated hepatic stellate cells with gliotoxin decreased transplanted cell engraftment. In conclusion, cell transplantation activated hepatic stellate cells, which, in turn, contributed to transplanted cell engraftment in the liver. Manipulation of hepatic stellate cells might provide new strategies to improve liver repopulation after enhanced transplanted cell engraftment.