Hepatocytes and cholangiocytes self-renew following liver injury. Following severe injury hepatocytes are increasingly senescent, but whether hepatic progenitor cells (HPCs) then contribute to liver regeneration is unclear. Here, we describe a mouse model where the E3 ubiquitin ligase Mdm2 is inducibly deleted in more than 98% of hepatocytes, causing apoptosis, necrosis and senescence with nearly all hepatocytes expressing p21. This results in florid HPC activation, which is necessary for survival, followed by complete, functional liver reconstitution. HPCs isolated from genetically normal mice, using cell surface markers, were highly expandable and phenotypically stable in vitro. These HPCs were transplanted into adult mouse livers where hepatocyte Mdm2 was repeatedly deleted, creating a non-competitive repopulation assay. Transplanted HPCs contributed significantly to restoration of liver parenchyma, regenerating hepatocytes and biliary epithelia, highlighting their in vivo lineage potency. HPCs are therefore a potential future alternative to hepatocyte or liver transplantation for liver disease.