The liver, whose major functional cell type is the hepatocyte, is a peculiar organ with remarkable regenerative capacity. The widely held notion that hepatic progenitor cells contribute to injury-induced liver regeneration has long been debated. However, multiple lines of evidence suggest that the plasticity of differentiated cells is a major mechanism for the cell source in injury-induced liver regeneration. Investigating cell plasticity could potentially expand our understanding of liver physiology and facilitate the development of new therapies for liver diseases. In this review, we summarize the cell sources for hepatocyte regeneration and the clinical relevance of cell plasticity for human liver diseases. We focus on mechanistic insights on the injury-induced cell plasticity of hepatocytes and biliary epithelial cells and discuss future directions for investigation. Specifically, we propose the notion of ‘reprogramming competence' to explain the plasticity of differentiated hepatocytes.