The Wnt target gene Lgr5 (leucine-rich-repeat-containing G-protein-coupled receptor 5) marks actively dividing stem cells in Wnt-driven, self-renewing tissues such as small intestine and colon1, stomach2 and hair follicles3. A three-dimensional culture system allows long-term clonal expansion of single Lgr5+ stem cells into transplantable organoids (budding cysts) that retain many characteristics of the original epithelial architecture2,4,5. A crucial component of the culture medium is the Wnt agonist RSPO16, the recently discovered ligand of LGR57,8. Here we show that Lgr5-lacZ is not expressed in healthy adult liver, however, small Lgr5-LacZ+ cells appear near bile ducts upon damage, coinciding with robust activation of Wnt signalling. As shown by mouse lineage tracing using a new Lgr5-IRES-creERT2 knock-in allele, damage-induced Lgr5+ cells generate hepatocytes and bile ducts in vivo. Single Lgr5+ cells from damaged mouse liver can be clonally expanded as organoids in Rspo1-based culture medium over several months. Such clonal organoids can be induced to differentiate in vitro and to generate functional hepatocytes upon transplantation into Fah−/− mice. These findings indicate that previous observations concerning Lgr5+ stem cells in actively self-renewing tissues can also be extended to damage-induced stem cells in a tissue with a low rate of spontaneous proliferation.