The objective of this Early Translational II Research Award is to develop a reproducible and efficient differentiation method to produce metabolically active human embryonic stem cell-derived hepatocytes (hEDH)(also called liver cells). We have determined that at least 90-95% of the cells have liver-specific gene expression and possess biotransformation ability comparable to freshly isolated human hepatocytes. This means that our cells that we have differentiated from embryonic stem cells are acting like human liver cells. In addition, the yield from differentiation should be adequate to support preclinical studies. We believe that we made excellent progress during the grant award period towards meeting the success criteria for the quality of the cells and that further work may well yield cells that can be transplanted into people.