The potential for organ damage after using drugs or chemicals is a critical issue in medicine. To delineate mechanisms of drug‐induced hepatic injury, we used transplanted cells as reporters in dipeptidyl peptidase IV–deficient mice. These mice were given phenytoin and rifampicin for 3 days, after which monocrotaline was given followed 1 day later by intrasplenic transplantation of healthy C57BL/6 mouse hepatocytes. We examined endothelial and hepatic damage by serologic or tissue studies and assessed changes in transplanted cell engraftment and liver repopulation by histochemical staining for dipeptidyl peptidase IV. Monocrotaline caused denudation of the hepatic sinusoidal endothelium and increased serum hyaluronic acid levels, along with superior transplanted cell engraftment. Together, phenytoin, rifampicin, and monocrotaline caused further endothelial damage, reflected by greater improvement in cell engraftment. Phenytoin, rifampicin, and monocrotaline produced injury in hepatocytes that was not apparent after conventional tissue studies. This led to transplanted cell proliferation and extensive liver repopulation over several weeks, which was more efficient in males compared with females, including greater induction by phenytoin and rifampicin of cytochrome P450 3A4 isoform that converts monocrotaline to toxic intermediates. Through this and other possible mechanisms, monocrotaline‐induced injury in the endothelial compartment was retargeted to simultaneously involve hepatocytes over the long term. Moreover, after this hepatic injury, native liver cells were more susceptible to additional pro‐oxidant injury through thyroid hormone, which accelerated the kinetics of liver repopulation. Conclusion: Transplanted reporter cells will be useful for obtaining insights into homeostatic mechanisms involving liver cell compartments, whereas targeted injury in hepatic endothelial and parenchymal cells with suitable drugs will also help advance liver cell therapy. (HEPATOLOGY 2007.)