Hepatic stellate cells (HSCs) play an important microenvironmental role in hepatic progenitor cells (HPCs) differentiation fate. To reveal the specific mechanism of HSCs induced by transforming growth factor β1 (TGF‐β1) signaling in HPCs differentiation process, we used Knockin and knockdown technologies induced by lentivirus to upregulate or downregulate TGF‐β1 level in mouse HSCs (mHSCs) (mHSCs‐TGF‐β1 or mHSCs‐TGF‐βR1sih3). Primary mouse HPCs (mHPCs) were isolated and were cocultured with mHSCs‐TGF‐β1 and mHSCs‐TGF‐βR1sih3 for 7 days. Differentiation of mHPCs was detected by quantitative reverse transcriptase polymerase chain reaction analysis and immunofluorence in vitro. mHPCs‐E_14.5 cell lines and differently treated mHSCs were cotransplanted into mice spleens immediately after establishment of acute liver injury model for animal studies. Engraftment and differentiation of transplanted cells as well as liver function recovery were measured at the seventh day via different methods. mHSCs‐TGF‐β1 were transformed into myofibroblasts and highly expressed Jagged1, but that expression was reduced after blockage of TGF‐β1 signaling. mHPCs highly expressed downstream markers of Jagged1/Notch signaling and cholangiocyte markers (CK19, SOX9, and Hes1) after coculture with mHSCs‐TGF‐β1 in vitro. In contrast, mature hepatocyte marker (ALB) was upregulated in mHPCs in coculture conditions with mHSCs‐TGF‐βR1sih3. At the seventh day of cell transplantation assay, mHPCs‐E _14.5 engrafted and differentiated into cholangiocytes after cotransplanting with TGF‐β1‐knockin mHSCs, but the cells had a tendency to differentiate into hepatocytes when transplanted with TGF‐βR1‐knockdown mHSCs, which corresponded to in vitro studies. HSCs play an important role in regulating HPCs differentiation into cholangiocytes via the TGF‐β1/Jagged1 signaling axis. However, HPCs have a tendency to differentiate into hepatocytes after blockage of TGF‐β1 signaling in HSCs.