In recent years, a large number of groups studied the fate of human stem cells in livers of immunodeficient animals. However, the interpretation of the results is quite controversial. We transplanted 4 different types of human extrahepatic precursor cells (derived from cord blood, monocytes, bone marrow, and pancreas) into livers of nonobese diabetic/severe combined immunodeficiency mice. Human hepatocytes were used as positive controls. Tracking of the transplanted human cells could be achieved by in situ hybridization with alu probes. Cells with alu-positive nuclei stained positive for human albumin and glycogen. Both markers were negative before transplantation. However, cells with alu-positive nuclei did not show a hepatocyte-like morphology and did not express cytochrome P450 3A4, and this suggests that these cells represent a mixed cell type possibly resulting from partial transdifferentiation. Using antibodies specific for human albumin, we also observed a second human albumin-positive cell type that could be clearly distinguished from the previously described cells by its hepatocyte-like morphology. Surprisingly, these cells had a mouse and not a human nucleus which is explained by transdifferentiation of human cells. Although it has not yet been formally proven, we suggest horizontal gene transfer as a likely mechanism, especially because we observed small fragments of human nuclei in mouse cells that originated from deteriorating transplanted cells. Qualitatively similar results were obtained with all 4 human precursor cell types through different routes of administration with and without the induction of liver damage. Conclusion: We observed evidence not for transdifferentiation but instead for a complex situation including partial differentiation and possibly horizontal gene transfer. (HEPATOLOGY 2007;46:861-870.