To assess the feasibility of liver tissue equivalents based on selective propagation and differentiation of hepatocyte progenitors in three-dimensional (3D) culture, the efficacy of fetal mouse liver cells cultured in poly-L-lactic acid (PLLA) scaffolds in the presence of nicotinamide, dimethyl sulfoxide, and oncostatin M was investigated both in vitro and in vivo. The albumin production of PLLA-cultured fetal mouse liver cells in the presence of these three factors was remarkably enhanced with culture time, and after 4 weeks it attained almost the same production found in adult mouse hepatocytes cultured for 3 days in PLLA scaffolds, based on the unit DNA amount. In addition, implantation of engineered liver tissue based on this in vitro PLLA culture system into the peritoneal cavity of 70% hepatectomized mice showed a remarkably higher presence of albumin-positive engrafted cells 15 days after the operation when compared with fetal mouse liver cells or adult mouse hepatocytes freshly isolated and cultured for 1 day. These results demonstrate that the basic concept regarding the engineering of liver tissue equivalents based on in vitro selective propagation and differentiation of hepatocyte progenitors in 3D biodegradable scaffolds shows promise for future liver tissue engineering.