Transplantation of hepatocytes or hepatocyte-like cells of extrahepatic origin is a promising strategy for treatment of acute and chronic liver failure. We examined possible utility of hepatocyte-like cells induced from bone marrow cells for such a purpose. Clonal cell lines were established from the bone marrow of two different rat strains. One of these cell lines, rBM25/S3 cells, grew rapidly (doubling time, similar to 24 hours) without any appreciable changes in cell properties for at least 300 population doubling levels over a period of 300 days, keeping normal diploid karyotype. The cells expressed CD29, CD44, CD49b, CD90, vimentin, and fibronectin but not CD45, indicating that they are of mesenchymal cell origin. When plated on Matrigel with hepatocyte growth factor and fibroblast growth factor-4, the cells efficiently differentiated into hepatocyte-like cells that expressed albumin, cytochrome P450 (CYP) 1A1, CYP1A2, glucose 6-phosphatase, tryptophane-2,3-dioxygenase, tyrosine aminotransferase, hepatocyte nuclear factor (HNF)1 alpha, and HNF4 alpha. Intrasplenic transplantation of the differentiated cells prevented fatal liver failure in 90%-hepatectomized rats. In conclusion, a clonal stem cell line derived from adult rat bone marrow could differentiate into hepatocyte-like cells, and transplantation of the differentiated cells could prevent fatal liver failure in 90%-hepatectomized rats. The present results indicate a promising strategy for treating human fatal liver diseases.