Liver disease is a rising cause of mortality and morbidity, and treatment options remain limited. Liver transplantation is curative but limited by donor organ availability, operative risk and long-term complications. The contribution of bone marrow (BM)-derived stem cells to tissue regeneration has been recognised and there is considerable interest in the potential benefits of BM stem cells in patients with liver disease. In chronic liver disease, deposition of fibrous scar tissue inhibits hepatocyte proliferation and leads to portal hypertension. Although initial reports had suggested transdifferentiation of stem cells into hepatocytes, the beneficial effects of BM stem cells are more likely derived from the ability to breakdown scar tissue and stimulate hepatocyte proliferation. Studies in animal models have yielded promising results, although the exact mechanisms and cell type responsible have yet to be determined. Small-scale clinical studies have quickly followed and, although primarily designed to examine safety and feasibility of this approach, have reported improvements in liver function in treated patients. Well-designed, controlled studies are required to fully determine the benefits of BM stem cell therapy.