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Liver failure represents a serious challenge for cell based therapies. Mesenchymal stem cells (MSCs) possess potential for regeneration of fibrotic liver; however, there is a dire need to improve their hepatic differentiation. This study examines a pretreatment strategy to augment the differentiation potential of MSCs towards hepatic lineage. MSCs were isolated from C57BL/6 wild type mice and were characterized by flow cytometry for CD44 (92.4%), CD90 (96.6%), CD105 (94.7%), CD45 (0.8%) and CD34 (1.4%) markers. To improve the differentiation potential of MSCs towards hepatic lineage, cells were pretreated with injured liver tissue in an in-vitro model, which resulted in high expression of albumin, cytokeratin 8, 18, TAT and HNF1α as compared to untreated MSCs. The efficacy of pretreated MSCs was evaluated by preparing in-vivo mouse model with liver fibrosis by intraperitoneal administration of CCl(4). Pretreated MSCs were transplanted in the left lateral lobe of mice with liver fibrosis and showed enhanced localization and differentiation abilities after 1 month. The expression for cytokeratin 8, 18, albumin and Bcl-xl was up-regulated and that of HGF, Bax and Caspase- 3 was down-regulated in animals transplanted with pretreated MSCs. Sirus red staining also confirmed a significant reduction in the fibrotic area in liver tissue transplanted with pretreated MSCs as compared to untreated MSCs and was concomitant with improved serum levels of bilirubin and alkaline phosphatase (ALP). Therefore, it was concluded that pretreatment with injured liver tissue augment homing and hepatic differentiation abilities of MSCs and provides an improved procedure for the treatment of liver fibrosis., (Copyright © 2010 International Society of Differentiation. Published by Elsevier B.V. All rights reserved.)