The generation of hepatic stem cells (HSCs) has a great potential for cell-based therapy in liver diseases. Recent studies reported direct conversion of hepatocytes and HSC from fibroblasts by using combinations of transcription factors. Although the therapeutic effect of hepatocytes has been explored in acute liver injury, the role of HSC in chronic liver damage remains unclear. Here, we demonstrate that combination of the transcription factors and hepatic culture conditions are sufficient to convert fibroblasts into expandable induced hepatic stem cells (iHSCs). These iHSCs possess self-renewal and bipotency with the capability to differentiate into hepatocytes and cholangiocytes. Hepatocytes-derived from iHSCs (iHSC-HEPs) exhibit the typical morphology and hepatic functionality including glycogen storage, low-density lipoprotein (LDL) uptake, Indocyanine green (ICG) detoxification, drug metabolism, and albumin secretion. Cholangiocyte-derived from iHSCs (iHSC-CCs) express cholangiocyte-specific markers and develop apical-basal polarity of the cystic and tubular structures with secretory function in threedimensional culture condition. Furthermore, iHSCs show anti-inflammatory and anti-fibrotic effects in a carbon tetrachloride (CCl4)-induced chronic liver damage model. This study demonstrates that iHSCs show typical hepatic functionality in vitro and a therapeutic effect in liver fibrosis model. Therefore, directly converting HSC from somatic cells might facilitate the development of patient-specific cell therapy for chronic liver diseases.