Liver regeneration involves not only hepatocyte replication but progenitor aggregation and scarring. Partial hepatectomy (PH), an established model for liver regeneration, reactivates transforming growth factor-beta (TGF-beta) signaling. Hepatic stellate cells (HSCs) are primarily responding cells for TGF-beta and resident in stem cell niche. In the current study, PH mice were treated with SB-431542, an inhibitor of TGF-beta Type I receptor, aiming to address the role of TGF-beta signaling on the fate determination of HSCs during liver regeneration. After PH, control mice exhibited HSCs activation, progenitor cells accumulation, and a fraction of HSCs acquired the phenotype of hepatocyte or cholangiocyte. Blocking TGF-beta signaling delayed proliferation, impaired progenitor response, and scarring repair. In SB-431542 group, merely no HSCs were found coexpressed progenitor makers, such as SOX9 and AFP. Inhibition of TGF-beta pathway disturbed the epithelial-mesenchymal transitions and diminished the nuclear accumulation of beta-catenin as well as the expression of cytochrome P450 2E1 in HSC during liver regeneration. We identify a key role of TGF-beta signaling on promoting HSC transition, which subsequently becomes progenitor for generating liver epithelial cells after PH. This process might interact with an acknowledged stem cell function signaling, Wnt/beta-catenin.