Differentiation of human hepatic progenitor cells to functional hepatocytes holds great potential to develop new therapeutic strategies for liver disease and to provide a platform for drug toxicity screens and identification of novel pharmaceuticals. We report here that human fetal hepatic progenitor cells (hFHPCs) efficiently differentiate to hepatocyte-like cells by continuous exposure to a combination of soluble factors for 7 days in vitro. We compared the effect of hepatocyte growth factor (HGF), oncostatin M (OSM), dexamethasone (DEX), or a combination on the expression of a liver-specific marker, albumin (ALB). Real-time RT-PCR analysis showed that, upon exposure to a combination of OSM, DEX, and HGF, the expression of ALB gradually increased in a time-dependent manner. In contrast, the level of the hepatic progenitor cell marker alpha-fetoprotein (AFP) decreased as differentiation progressed. Moreover, cells exposed to the combination of OSM, DEX, and HGF gradually featured highly differentiated hepatic functions, including ALB secretion, glycogen storage, urea production, and cytochrome P450 (CYP) activity. The effect of these factors on the differentiation of hFHPCs may be blocked by U0126, an inhibitor of the ERK1/2 signaling pathway. In conclusion, we demonstrate that a combination of soluble factors facilitates the efficient generation of highly differentiated hepatocyte-like cells from hFHPCs and ERK1/2 signaling pathway involved in this process. Results suggest that this system will be useful for generating functional hepatocytes and, hence, may serve as a cell source suitable for preclinical pharmacological research and testing. J. Cell. Physiol. 227: 2051–2058, 2012. © 2011 Wiley Periodicals, Inc.