Transplantation of hepatocytes is a promising alternative to liver transplantation for the treatment of severe liver diseases. However, this approach is hampered by the shortage of donor organs and intrinsic limitations of adult hepatocytes. To investigate whether most of the hurdles faced with adult hepatocytes could be surmounted by the use of human fetal hepatoblasts, we have developed a method to isolate, transduce, and cryopreserve hepatoblasts from human livers at an early stage of development (11-13 weeks of gestation). Cells were characterized in vitro for expression of specific markers, and in vivo for their proliferation and differentiation potential after transplantation into athymic mice. Most of the cells (80-90%) harbored a bipotent phenotype, expressing cytokeratins 8/18, albumin, and CK19. They proliferated spontaneously in culture and were efficiently transduced by a beta-galactosidase-expressing retrovirus (90%). After transplantation, cryopreserved cells engrafted into the liver of athymic mice and proliferated, resulting in up to 10% repopulation. Engrafted cells expressed markers of differentiated adult hepatocytes including albumin, alpha1-antitrypsin, cytochrome P450 3A4, and alpha-glutathione-S-transferase. When retrovirally transduced before transplantation they expressed the transgene in vivo. In summary, early human fetal hepatoblasts engraft, proliferate, and mature in athymic mouse liver, without conditioning the donor.