Hepatic oval stem cells have been identified under physiological and more often after severe liver injury when the proliferation of existing hepatocytes has been inhibited. Oval cells are bipotential progenitors of the two major epithelial cell types in the liver: hepatocytes and cholangiocytes (i.e., bile duct lining cells). The origins of oval cells have been much debated. They have been proposed to be the result of hepatocyte dedifferentiation or of small, resident cholangiocytes or periductal cells, or to be derived, from hematopoietic stem cells. Hepatic oval cells have the ability to repair damaged liver on a par with native hepatocytes. As such, oval cells would present a means of cellular therapy in liver injury. Intriguingly, hematopoietic stem cells from bone marrow and cord blood have recently been shown to be a source of both hepatic oval cells and hepatocytes, with the ability to reconstitute injured liver. These findings have, however, been the subject of extensive controversy, with confounding studies and hypotheses abounding in the literature. This article reviews the data regarding the location, characterization, and function of hepatic oval cells, and also discusses the controversies surrounding transdifferentiation and fusion of hematopoietic stem cells during their contribution to hepatocytes.