Since 1999, numerous articles have reported the generation of hepatocytes from different types of extrahepatic stem or precursor cells. This opens exciting new possibilities for pharmacology and toxicology, as well as for cell therapy. Hepatocyte marker expression, including albumin, cytokeratin 18, c-met, alpha-fetoprotein and cytochrome P450 3A4 and -2B6, has been observed after transplantation of different types of human stem cells into the liver of laboratory animals or in vitro after incubation with cytokines. These intriguing observations have prompted scientists to classify stem cell-derived cell populations as hepatocytes. However, this conclusion may be premature. It has been shown that factors of the liver microenvironment can induce expression of a limited number of hepatocyte marker genes in nonhepatic cell types. To conclude on the grounds of a limited number of markers that these cells are true hepatocytes is not indicated. In this case one should carefully evaluate crucial hepatocyte-defining enzymatic properties. The present article: i) reviews studies describing the fate of extrahepatic human stem and precursor cells in livers of laboratory animals, including the possibility of cell fusion; and ii) critically discusses the phenotype of stem cells after application of various differentiation protocols aimed at generating human hepatocytes. In addition, the necessary criteria needed for defining a true hepatocyte are suggested. Establishing the necessary properties for stem cell-derived hepatocytes is timely and reasonable, and thus avoids further misleading semantic confusion. Finally, it is essential to understand that the definition of a bona fide hepatocyte should not be limited to qualitative assays, such as reverse transcriptase polymerase chain reaction and immunohistochemistry, but has to include a quantitative analysis of enzymatic activities, which allows direct comparison with primary hepatocytes. Although the stem cell-derived-hepatocyte does not yet exist there is a good chance that this aim may be achieved in the future.