Stem cells have potential for therapy of liver diseases, but may also be involved in the formation of liver cancer. Recently, the American Association for the Study of Liver Diseases Henry M. and Lillian Stratton Basic Research Single Topic Conference “Stem Cells in Liver Diseases and Cancer: Discovery and Promise” brought together a diverse group of investigators to define the status of research on stem cells and cancer stem cells in the liver and identify problems and solutions on the path to clinical translation. This report summarizes the outcomes of the conference and provides an update on recent research advances. Progress in liver stem cell research includes isolation of primary liver progenitor cells (LPCs), directed hepatocyte differentiation of primary LPCs and pluripotent stem cells, findings of transdifferentiation, disease‐specific considerations for establishing a therapeutically effective cell mass, and disease modeling in cell culture. Tumor‐initiating stem‐like cells (TISCs) that emerge during chronic liver injury share the expression of signaling pathways, including those organized around transforming growth factor beta and β‐catenin, and surface markers with normal LPCs. Recent investigations of the role of TISCs in hepatocellular carcinoma have provided insight into the transcriptional and post‐transcriptional regulation of hepatocarcinogenesis. Targeted chemotherapies for TISC are in development as a means to overcome cellular resistance and mechanisms driving disease progression in liver cancer. (HEPATOLOGY 2012;55:298–306)