To determine whether disruption of the hepatic sinusoidal endothelium will facilitate engraftment of transplanted cells, we treated Fischer 344 (F344) rats lacking dipeptidyl peptidase IV (DPPIV) activity with cyclophosphamide (CP). Electron microscopy showed endothelial injury within 6 hours following CP, and, after 24 and 48 hours, the endothelium was disrupted in most hepatic sinusoids. CP did not affect Kupffer cell function. Similarly, CP had no obvious effects on hepatocytes. Intrasplenic transplantation of F344 rat hepatocytes followed by their localization with DPPIV histochemistry showed 3- to 5-fold increases in the number of transplanted cells in CP-treated animals. Transplanted cells integrated in the liver parenchyma more rapidly in CP-treated animals, and hybrid bile canaliculi developed even 1 day after cell transplantation, which was not observed in control animals. To demonstrate whether improved cell engraftment translated into superior liver repopulation, recipient animals were conditioned with retrorsine and two-thirds partial hepatectomy (PH), which induces transplanted cell proliferation. CP treatment of these animals before cell transplantation significantly increased the number and size of transplanted cell foci. In conclusion, disruption of the hepatic sinusoidal endothelium was associated with accelerated entry and integration of transplanted cells in the liver parenchyma. These results provide insights into hepatocyte engraftment in the liver and will help in optimizing liver-directed cell therapy.