p27^Kip1 is an important regulator of cyclin-dependent kinases. Studies with p27 knockout mice have revealed abnormalities in proliferation and differentiation of multiple cell types. Here we show that primary hepatocytes isolated from livers of adult p27 knockout mice exhibit higher levels of DNA synthesis activity in culture than do wild-type cells. Interestingly, we found that, compared with control hepatocytes, p27 knockout hepatocytes proliferate better after transplantation into diseased livers to reverse liver failure. These results reveal an aspect of p27 that could be used to benefit cell-based therapy.