Rats with chimeric livers were generated by using the protocol of injecting hepatocytes from dipeptidyl peptidase IV (DPPIV)‐positive donors into retrorsine‐treated DPPIV‐negative recipients subjected to partial hepatectomy. Rats with established chimeric livers were subjected to bile duct ligation, with or without pretreatment with the biliary toxin methylene diamiline (DAPM). Ductules bearing the donor hepatocyte marker DPPIV were seen at 30 days after bile duct ligation. The frequency of the ductules derived from the donor hepatocytes was dramatically enhanced (36‐fold) by the pretreatment with DAPM. In conclusion, our results show that hepatocytes can function as facultative stem cells and rescue the biliary epithelium during repair from injury when its proliferative capacity is being compromised. (HEPATOLOGY 2005;41:535–544.)