PTEN (phosphatase and tensin homolog deleted on chromosome 10) is a lipid phosphatase that regulates mitogenic signaling pathways, and deficiency of PTEN results in cell proliferation, survival, and malignancy. Murine liver-specific Pten deletion models develop liver malignancy by 12 months of age. Using this model, we describe a population of CD133+ liver cancer stem cells isolated during the chronic injury phase of disease progression and before primary carcinoma formation. We performed immunohistochemistry and flow cytometry isolation using livers from 3- and 6-month-old Pten^loxP/loxP; Alb−Cre+ mice (mutants) and controls. CD133+CD45− nonparenchymal (NP) cells were analyzed for gene expression profile and protein levels. Single CD133+CD45− oval cells were isolated for clonal expansion and tumor analysis. Cultured and freshly isolated liver CD133+CD45− and CD133−CD45− NP cells were injected into immune-deficient and immune-competent mice. In mutant mice, the NP fraction increased in CD133+CD45− cells in 3- and 6-month-old Pten-deleted animals compared with controls. Clone lines expanded from single CD133+CD45− cells demonstrated consistent liver progenitor cell phenotype, with bilineage gene expression of hepatocyte and cholangiocyte markers. CD133+ cells from expanded clone lines formed robust tumors in immune-deficient and immune-competent mice. Furthermore, freshly isolated CD133+CD45− NP liver cells from 6-month-old mutants formed tumors in vivo, and CD133−CD45− NP cells did not. Consistent with a cancer stem cell phenotype, CD133+ cells demonstrate resistance to chemotherapy agents compared with CD133− cells. CD133+CD45− nonparenchymal cells from chronic injury Pten^loxP/loxP; Alb−Cre+ mice represent a bipotent liver progenitor cell population with cancer stem cell phenotype.