The liver is one of the few organs that possess a high capacity to regenerate after liver failure or liver damage. The parenchymal cells of the liver, hepatocytes, contribute to the majority of the regeneration process. Thus, hepatocyte transplantation presents an alternative method to treating liver damage. However, shortage of hepatocytes and difficulties in maintaining primary hepatocytes still remain key obstacles that researchers must overcome before hepatocyte transplantation can be used in clinical practice. The unique properties of pluripotent stem cells (PSCs) and induced pluripotent stem cells (iPSCs) have provided an alternative approach to generating enough functional hepatocytes for cellular therapy. In this review, we will present a brief overview on the current state of hepatocyte differentiation from PSCs and iPSCs. Studies of liver regenerative processes using different cell sources (adult liver stem cells, hepatoblasts, hepatic progenitor cells, etc.) will be described in detail as well as how this knowledge can be applied towards optimizing culture conditions for the maintenance and differentiation of these cells towards hepatocytes. As the outlook of stem cell-derived therapy begins to look more plausible, researchers will need to address the challenges we must overcome in order to translate stem cell research to clinical applications.