In chronic liver injury, liver progenitor cells (LPCs) proliferate in the periportal area, migrate inside the lobule, and undergo further differentiation. This process is associated with extracellular matrix (ECM) remodeling. We analyzed LPC expansion and matrix accumulation in a choline‐deficient, ethionine‐supplemented (CDE) model of LPC proliferation. After day 3, CDE induced collagen deposits in the periportal area. Expansion of LPCs as assessed by increased number of cytokeratin 19 (CK19)‐positive cells was first observed at day 7, while ECM accumulated 10 times more than in controls. Thereafter, LPCs and ECM increased in parallel. Furthermore, ECM not only accumulates prior to the increase in number of LPCs, but is also found in front of LPCs along the porto‐venous gradient of lobular invasion. Double immunostaining revealed that LPCs are embedded in ECM at all times. Moreover, LPCs infiltrating the liver parenchyma are chaperoned by α‐smooth muscle actin (α‐SMA)–positive cells. Gene expression analyses confirmed these observations. The expression of CK19, α‐fetoprotein, E‐cadherin, and CD49f messenger RNA (mRNA), largely overexpressed by LPCs, significantly increased between day 7 and day 10. By contrast, at day 3 there was a rapid burst in the expression of components of the ECM, collagen I and laminin, as well as in α‐SMA and connective tissue growth factor expression. Conclusion: Our data demonstrate that, in a CDE model, ECM deposition and activation of matrix‐producing cells occurred as an initial phase, prior to LPC expansion, and in front of LPCs along the porto‐veinous gradient of lobular invasion. Those observations may reveal a fundamental role for the established hepatic microenvironment or niche during the process of activation and differentiation of liver progenitor cells. (HEPATOLOGY 2009.)