Hepatic stellate cells are liver-specific mesenchymal cells that play vital roles in liver physiology and fibrogenesis. They are located in the space of Disse and maintain close interactions with sinusoidal endothelial cells and hepatic epithelial cells. It is becoming increasingly clear that hepatic stellate cells have a profound impact on the differentiation, proliferation, and morphogenesis of other hepatic cell types during liver development and regeneration. In this Review, we summarize and evaluate the recent advances in our understanding of the formation and characteristics of hepatic stellate cells, as well as their function in liver development, regeneration, and cancer. We also discuss how improved knowledge of these processes offers new perspectives for the treatment of patients with liver diseases.