Bone-marrow transplantation (BMT) can repopulate the liver through BM-derived hepatocyte (BMDH) generation, although the underlying mechanism remains unclear. Using fumarylacetoacetate hydrolase-deficient (Fah(-/-)) mice as a liver-failure model, we confirmed that BMDHs were generated by fusion of BM-derived CD11b(+)F4/80(+)myelomonocytes with resident Fah(-/-) hepatocytes. Hepatic NK cells became activated during BMDH generation and were the major IFN-γ producers. Indeed, both NK cells and IFN-γ were required for BMDH generation since WT, but not NK-, IFN-γ-, or IFN-γR1-deficient BM transplantation successfully generated BMDHs and rescued survival in Fah(-/-) hosts. BM-derived myelomonocytes were determined to be the IFN-γ-responding cells. The IFN-γ-IFN-γR interaction contributed to the myelomonocyte-hepatocyte fusion process, as most of the CD11b(+) BMDHs in mixed BM chimeric Fah(-/-) hosts transplanted with a 1:1 ratio of CD45.1(+) WT and CD45.2(+) Ifngr1(-/-) BM cells were of CD45.1(+) WT origin. Confirming these findings in vitro, IFN-γ dose-dependently promoted the fusion of GFP(+) myelomonocytes with Fah(-/-) hepatocytes due to a direct effect on myelomonocytes; similar results were observed using activated NK cells. In conclusion, BMDH generation requires NK cells to facilitate myelomonocyte-hepatocyte fusion in an IFN-γ-dependent manner, providing new insights for treating severe liver failure.