Liver transplantation is the treatment of choice for chronic liver failure, although it is complicated by donor shortage, surgery-related complications, and immunological rejection. Cell transplantation is an alternative, minimally invasive treatment option with potentially fewer complications. We used human palatine tonsil as a novel source of mesenchymal stem cells (T-MSCs) and examined their ability to differentiate into hepatocyte-like cells in vivo and in vitro. Carbon tetrachloride (CCl4) mouse model was used to investigate the ability of T-MSCs to home to the site of liver injury. T-MSCs were only detected in the damaged liver, suggesting that they are disease-responsive. Differentiation of T-MSCs into hepatocyte-like cells was confirmed in vitro as determined by expression of hepatocyte markers. Next, we showed resolution of liver fibrosis by T-MSCs via reduction of TGF-β expression and collagen deposition in the liver. We hypothesized that autophagy activation was a possible mechanism for T-MSC-mediated liver recovery. In this report, we demonstrate for the first time that T-MSCs can differentiate into hepatocyte-like cells and ameliorate liver fibrosis via autophagy activation and down-regulation of TGF-β. These findings suggest that T-MSCs could be used as a novel source for stem cell therapy targeting liver diseases.