Many acute and chronic liver diseases are often associated with atypical ductular proliferation (ADP). These ADPs have gained increasing interest since a number of recent observations suggest that ADPs may represent progenies of the putative liver stem cell compartment. In this study, we show that feeding mice with 3,5-diethoxycarbonyl-1,4-dihydrocollidine (DDC) results in persistent proliferation of primitive ductules with poorly defined lumens. Similar to oval cell proliferation in other rodent models as well as in various human liver diseases, DDC-induced ADP originated from the portal tract, spread into the hepatic lobule, and was associated closely with appearance of hepatocytes harboring an antigen (A6), which normally is expressed in biliary epithelium. Furthermore, DDC treatment severely inhibited the regenerative capacity of mice after partial hepatectomy. The development of ADP was selectively blocked in DDC-fed TGF-beta1 transgenic mice producing active TGF-beta1 in the liver and no accumulation of new hepatocytes expressing the A6 antigen was observed. Moreover, the transforming growth factor beta1 (TGF-beta1) transgenic mice did not survive beyond 3 weeks from starting the DDC-containing diet. The results suggest that persistent activation of the hepatic stem cell compartment is essential for liver regeneration in the DDC model and that active TGF-beta1 may negatively control activation of stem cells in the liver. These data further emphasize the relevance of the DDC model as an experimental tool for studying chronic liver diseases.