Yi Guan Jian decoction (YGD) may induce the differentiation of bone marrow mesenchymal stem cells (BMSCs) into hepatocyte-like cells (HLCs); however, the underlying mechanisms remain to be elucidated. The present study aimed to investigate this process. To do this, a dimethylnitrosamine (DMN)-induced liver cirrhosis mouse model was established. The mice from the model group were randomly divided into three subgroups: i) Negative control, ii) hepatocyte growth factor and iii) YGD. The overall health, liver function and histological alterations were monitored. The expression of α‑smooth muscle actin (α‑SMA), C‑X‑C chemokine receptor type 4 (CXCR4), extracellular signal‑regulated kinase (ERK1/2), nuclear factor κB p65 subunit (NF‑κB p65) and β‑catenin were measured by immunohistochemistry, western blotting and reverse transcription‑quantitative polymerase chain reaction. Following administration of DMN, the overall health of the mice significantly decreased, with an increase in pathological developments and liver damage resulting in a decrease in liver function. Immunohistochemistry revealed that the expression of α‑SMA, CXCR4, ERK1/2, NF‑κB p65 and β‑catenin was upregulated. Following treatment with YGD, the overall health, liver function and pathology improved. The mRNA and protein expression levels of CXCR4 and ERK1/2 were upregulated, where as α‑SMA, NF‑κB p65 and β‑catenin levels were downregulated. The results demonstrated that YGD may induce the differentiation of BMSCs into HLCs to reverse DMN‑induced liver cirrhosis; this may be achieved via an upregulation of the SDF‑1/CXCR4 axis to activate the mitogen activated protein kinase/ERK1/2 signaling pathway.