Liver epithelial cells –hepatocytes and bile duct cells– intermingle with a microenvironment of endothelial cells, macrophages and mesenchymal cells to form the functional unit of the tissue. In chronic or severe liver injury, when hepatocyte proliferation is compromised, ductal cells become activated into bipotential progenitors to replace lost epithelium. This process can be recapitulated in vitro by growing hepatic ductal cells under defined extracellular matrix and growth factors, which generates 3D epithelial 'liver organoids' that resemble adult tissue, yet lack stromal cell components (Huch et al., 2013). In this dissertation, we compared the capacity of two broad hepatic stromal cell populations, hematopoietic/endothelial (H/E) and mesenchymal (Msc) cells, to behave as a nurturing ‘niche’ of the ductal epithelium. In the absence of exogenous growth factors, primary Msc but not H/E cells support ductal cell proliferation and organoid formation in vitro. A cell surface marker screen of the Msc fraction showed labelling of up to 20% of the cells by the stem cell antigen 1 (SCA1). In vivo, SCA1+PDGFRα+ mesenchymal cells localise periportally, closely surrounding biliary duct cells, and co-expanding with them during damage- induced regeneration. Isolated SCA1+ mesenchymal cells express key pro- regenerative factors (Hgf, Rspo1/3, Fgf7), and support liver organoid formation independently of cell-to-cell contact. Mesenchyme-sustained organoids resemble those grown in standard medium, although they are biased towards a more mature ductal cell lineage. Liver organoids can in turn support the expansion of SCA1+ Msc cells in vitro, suggesting a positive feedback loop of growth. However, physical contact from the SCA1+ Msc cells can be cytostatic for the ductal cells depending on the ratio between the two cell populations. Interestingly, the mesenchymal-to-ductal ratios that permit and inhibit ductal proliferation in vitro recapitulate the ratios observed between the two populations in vivo, during the different phases of liver regeneration. Our findings underscore how the relationship between the ductal epithelium and its mesenchymal microenvironment regulates tissue regeneration, and provide avenues for the development of organotypic liver cultures to model epithelial/mesenchymal interactions in vitro.