Upon severe and/or chronic liver injury, ectopic emergence and expansion of atypical biliary epithelial-like cells in the liver parenchyma, known as the ductular reaction, is typically induced and implicated in organ regeneration. Although this phenomenon has long been postulated to represent activation of facultative liver stem/progenitor cells that give rise to new hepatocytes, recent lineage-tracing analyses have challenged this notion, thereby leaving the pro-regenerative role of the ductular reaction enigmatic. Here, we show that the expanded and remodelled intrahepatic biliary epithelia in the ductular reaction constituted functional and complementary bile-excreting conduit systems in injured parenchyma where hepatocyte bile canalicular networks were lost. The canalicular collapse was an incipient defect commonly associated with hepatocyte injury irrespective of cholestatic statuses, and could sufficiently provoke the ductular reaction when artificially induced. We propose a unifying model for the induction of the ductular reaction, where compensatory biliary epithelial tissue remodeling ensures bile-excreting network homeostasis.