We previously demonstrated that expression of an albumin-urokinase-type plasminogen activator (Alb-uPA) fusion construct in transgenic mice resulted in elevated plasma uPA concentration, hypofibrinogenemia, and neonatal hemorrhaging. Two lines of Alb-uPA mice were established in which only one half of the transgenic pups died at birth; surprisingly, plasma uPA concentrations in survivors gradually returned to normal by 2 months of age. The basis for this phenomenon is DNA rearrangement within hepatocytes that affects the transgene tandem array and abolishes transgene expression. Transgene-deficient cells selectively proliferate relative to surrounding liver, and this process culminates in replacement of the entire liver by clonal hepatic nodules derived from transgene-deficient progenitor cells. In some cases as few as two nodules can reconstitute over 90% of liver mass, highlighting the remarkable regenerative capacity of individual liver cells.