Liver tissue engineering using hepatocyte transplantation has been proposed as an alternative to whole‐organ transplantation or liver‐directed gene therapy to correct various types of hepatic insufficiency. Hepatocytes are not sustained when transplanted under the kidney capsule of syngeneic mice. However, when we transplanted hepatocytes with the extracellular matrix components extracted from Engelbreth‐Holm‐Swarm cells, hepatocytes survived for at least 140 days and formed small liver tissues. Liver engineering in hemophilia A mice reconstituted 5% to 10% of normal clotting activity, enough to reduce the bleeding time and have a therapeutic benefit. Conversely, the subcutaneous space did not support the persistent survival of hepatocytes with Engelbreth‐Holm‐Swarm gel matrix. We hypothesized that establishing a local vascular network at the transplantation site would reduce graft loss. To test this idea, we provided a potent angiogenic agent before hepatocyte transplantation into the subcutaneous space. With this procedure, persistent survival was achieved for the length of the experiment (120 days). To establish that these engineered liver tissues also retained their native regeneration potential in vivo, we induced two different modes of proliferative stimulus to the naïve liver and confirmed that hepatocytes within the extrahepatic tissues regenerated with activity similar to that of naïve liver. In conclusion, our studies indicate that liver tissues can be engineered and maintained at extrahepatic sites, retain their capacity for regeneration in vivo, and used to successfully treat genetic disorders. (HEPATOLOGY 2005;41:132–140.)