Directed endodermal differentiation of murine embryonic stem (ES) cells gives rise to a subset of cells with a hepatic phenotype. Such ES cell-derived hepatic progenitor cells (ES-HPC) can acquire features of hepatocytes in vitro, but fail to form substantial hepatocyte clusters in vivo. In this study, we investigated whether this is due to inefficient engraftment or an immature phenotype of ES-HPC. ES cells engrafted into recipient livers of NOD/SCID mice with a similar efficacy as adult hepatocytes after 28 days. Because transplanted unpurified ES-HPC formed teratomas in the spleen and liver, we applied an albumin promoter/enhancer-driven reporter system to purify ES-HPC by cell sorting. RT-PCR analyses for hepatocyte-specific genes showed that the cells exhibited a hepatic phenotype, lacking the expression of the pluripotency marker Oct4, comparable to cells of day 11.5 embryos. Sorted ES-HPC derived from beta-galactosidase transgenic ES cells were injected into fumaryl-acetoacetate-deficient (FAH(-/-)) SCID mice and analyzed after 8 to 12 weeks. Staining with X-gal solution revealed the presence of engrafted cells throughout the liver. However, immunostaining for the FAH protein indicated hepatocyte formation at a very low frequency, without evidence for large hepatocyte cluster formation. In conclusion, the limited repopulation capacity of ES-HPC is not caused by a failure of primary engraftment, but may be due to an immature hepatic phenotype of the transplanted ES-HPC.