Liver progenitor cells (LPCs) play a major role in the regeneration process after chronic liver damage, giving rise to hepatocytes and cholangiocytes. Thus, they provide a cell-based therapeutic alternative to organ transplant, the current treatment of choice for end-stage liver disease. In recent years, much attention has focused on unravelling the cytokines and growth factors that underlie this response. Liver regeneration following acute damage is achieved by proliferation of mature hepatocytes; yet similar cytokines, most related to the inflammatory process, are implicated in both acute and chronic liver regeneration. Thus, many recent studies represent attempts to identify LPC-specific factors. This review summarises our current understanding of LPC biology with a particular focus on the liver inflammatory response being associated with the induction of LPCs in the liver. We will describe: (i) the pathways of liver regeneration following acute and chronic damage; (ii) the similarities and differences between the two pathways; (iii) the liver inflammatory environment; (iv) the unique features of liver immunology as well as (v) the interactions between liver immune cells and LPCs. Combining data from studies on the LPC-driven regeneration process with the knowledge in the field of liver immunology will improve our understanding of the LPC response and allow us to regulate these cells in vivo and in vitro for future therapeutic strategies to treat chronic liver disease.