Mesenchymal tissues harbour stromal cells capable of multilineage differentiation. Here, we demonstrate the isolation of mesenchymal stem cells (MSC) from rat peritoneal adipose tissue capable of osteogenic and adipogenic differentiation. Under in vitro conditions favouring hepatocyte differentiation, these MSC gained characteristic functions of hepatocytes such as the capacity to synthesize urea or store glycogen. Hepatocyte-specific transcripts of dipeptidylpeptidase type IV (CD26), albumin, cytochrome P450 type 1A1 (CYP1A1) and connexin CX32 (CX32) were detected only in differentiated but not undifferentiated cells. Transient transgenic expression of luciferase could be stimulated by cAMP when driven by the hepatocyte-specific promoter of the cytosolic phosphoenolpyruvate carboxykinase (PCK1) gene. Finally, stem cell-derived hepatocytes from wild type (CD26+/+) rats were transplanted into the livers of CD26-deficient animals after lentiviral transduction with the GFP gene under the control of the ubiquitin promoter. GFP-positive cells engrafted in the host liver predominantly in the periportal region of the liver lobule. They continued to express CD26, a prominent feature of differentiated hepatocytes, indicating their topologically and functionally proper integration into the host liver parenchyma. Thus, MSCs from rat peritoneal adipose tissue exhibit the potential to differentiate into hepatocyte-like cells in vitro and in vivo.