We examined whether human fetal mesenchymal stem cells (FMSCs) derived from fetal bone marrow were able to differentiate into functional hepatocyte-like cells in vitro. The surface phenotype of FMSCs was characterized by flow cytometry. To induce hepatic differentiation of FMSCs, we added hepatocyte growth factor, basic fibroblast growth factor and oncostatin M into the cell culture medium. After 21 days of hepatocyte induction, FMSCs expressed the hepatocyte-specific markers, alpha-fetoprotein and cytokeratin 18, as demonstrated by immunofluorescence staining. Differentiated FMSCs also demonstrated in vitro functions characteristic of liver cells, including albumin production, urea secretion and glycogen storage. In conclusion, fetal bone marrow-derived FMSCs are able to differentiate into functional hepatocytelike cells and may serve as a source of cells for liver disease therapy.