The limited replicative potential of primary hepatocytes (Hep) is a major hurdle for obtaining sufficient quantity and quality hepatocytes during cell therapy in patients with liver failure. Intrahepatic cholangiocyte organoids (ICOs) derived from intrahepatic bile ducts differentiate into both hepatocytes and cholangiocytes in vitro. Here, we studied in vivo effects of transplanting ICOs and Hep in chronic liver injury mice models. Well characterized primary mouse ICOs and Hep were mixed in decellularized liver (DCL) matrix hydrogels and injected into the subcapsular left lateral liver lobe of CCl4-induced liver injury models whereas mice given DCL alone were in the sham group. Two weeks post-transplantation, transplanted liver lobes were collected and studied by histology and RNA sequencing. Transplanted animals did not exhibit any tumors, mortality or morbidity. Mice livers transplanted with ICOs had increased cellular proliferation and vascularization as compared to Hep transplanted mice or sham. Collagen deposition in the liver was significantly reduced and serum albumin levels were significantly increased in transplanted groups compared to the sham group. Expression of genes associated with hepatocyte differentiation was highest in Hep transplanted livers among the three groups, but they were also upregulated in ICO transplanted livers compared to sham. Our study demonstrates that ICOs encapsulated in DCL hydrogels when transplanted in chronically injured mice livers engraft well and show hepatocyte differentiation and reduction of fibrosis, indicating that hydrogel transplanted cholangiocyte organoids may serve as an efficient cell source and therapy for renewal of hepatocytes, restoration of hepatocyte functions and resolution of liver injury.