We have developed an in vivo mouse model, the green fluorescent protein (GFP)/carbon tetrachloride (CCl(4)) model, and have previously reported that transplanted GFP-positive bone marrow cells (BMCs) differentiate into hepatocytes via hepatoblast intermediates. Here, we have investigated the growth factors that are closely related to the differentiation of transplanted BMCs into hepatocytes, and the way that a specific growth factor affects the differentiation process in the GFP/CCl(4) model. We performed immunohistochemical analysis to identify an important growth factor in our model, viz., fibroblast growth factor (FGF). In liver samples, the expression of FGF1 and FGF2 and of FGF receptors (FGFRs; FGFR1, FGFR2) was significantly elevated with time after bone marrow transplantation (BMT) compared with other factors, and co-expression of GFP and FGFs or FGFRs could be detected. We then analyzed the effect and molecular mechanism of FGF signaling on the enhancement of BMC differentiation into hepatocytes by immunohistochemistry, immunoblotting, and microarray analysis. Treatment with recombinant FGF (rFGF), especially rFGF2, elevated the repopulation rate of GFP-positive cells in the liver and significantly increased the expression of both Liv2 (hepatoblast marker) and albumin (hepatocyte marker). Administration of rFGF2 at BMT also raised serum albumin levels and improved the survival rate. Transplantation of BMCs with rFGF2 specifically activated tumor necrosis factor-alpha (TNF-alpha) signaling. Thus, FGF2 facilitates the differentiation of transplanted BMCs into albumin-producing hepatocytes via Liv2-positive hepatoblast intermediates through the activation of TNF-alpha signaling. Administration of FGF2 in combination with BMT improves the liver function and prognosis of mice with CCl(4)-induced liver damage.