Oval cells and small hepatocytes (SHs) are known to be hepatic stem and progenitor cells. Although oval cells are believed to differentiate into mature hepatocytes (MHs) through SHs, the details of their differentiation process are not well understood. Furthermore, it is not certain whether the induced cells possess fully mature functions as MHs. In the present experiment, we used Thy1 and CD44 to isolate oval and progenitor cells, respectively, from D-galactosamine-treated rat livers. Epidermal growth factor, basic fibroblast growth factor, or hepatocyte growth factor could trigger the hepatocytic differentiation of sorted Thy1+ cells to form epithelial cell colonies, and the combination of the factors stimulated the emergence and expansion of the colonies. Cells in the Thy1+-derived colonies grew more slowly than those in the CD44+-derived ones in vitro and in vivo and the degree of their hepatocytic differentiation increased with CD44 expression. Although the induced hepatocytes derived from Thy1+ and CD44+ cells showed similar morphology to MHs and formed organoids from the colonies similar to those from SHs, many hepatic differentiated functions of the induced hepatocytes were less well performed than those of mature SHs derived from the healthy liver. The gene expression of cytochrome P450 1A2, tryptophan 2,3-dioxygenase, and carbamoylphosphate synthetase I was lower in the induced hepatocytes than in mature SHs. In addition, the protein expression of CCAAT/enhancer-binding protein alpha and bile canalicular formation could not reach the levels of production of mature SHs. Conclusion: The results suggest that, although Thy1+ and CD44+ cells are able to differentiate into hepatocytes, the degree of maturation of the induced hepatocytes may not be equal to that of healthy resident hepatocytes. (HEPATOLOGY 2013)