Adipose-derived stem cells (ADSCs) are easy to harvest and have the ability for self-renewal and to differentiate into various cell types, including those of the hepatic lineage. Studies on the use of ADSCs for liver transplantation are, however, limited. The objective of this study was to investigate the feasibility of using human ADSCs and to better understand their mechanism of action for the repair of liver damage in a thioacetamide (TAA)-induced model of chronic liver damage in the rat. To induce liver damage, 200 mg/kg TAA was injected intraperitoneally into Wistar rats every 3 days for 60 days. For cell therapy, 1 × 10 6 human ADSCs suspended in 300 ml of phosphate-buffered saline were transplanted into each experimental rat by direct liver injection. Immunohistochemistry showed that the transplanted ADSCs differentiated into albumin-and a-fetoproteinsecreting liver-like cells 1 week after transplantation. In addition, liver function recovered significantly, as determined by biochemical analyses that analyzed total bilirubin, prothrombin time, and albumin levels. The Metavir score, derived from histopathological analysis, also showed a significant decrease in liver fibrosis and inflammatory activity after ADSC transplantation. Finally, we found a reduction in the expression of a-smooth muscle actin, a marker of hepatic stellate cells, which produce collagen fiber, and an increase in the expression of matrix metalloproteinase-9, which degrades collagen fiber, after ADSC transplantation. These findings are consistent with abrogation of liver fibrosis in the ADSC therapy group. Consequently, these results suggest that ADSC transplantation may facilitate recovery from chronic liver damage and thus may have clinical applications.