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Background: CD24+CK19+/CD24+SOX9+ resident liver cells are activated and expanded after chronic liver injury in a ductular reaction. However, the sources and functions of these cells in liver damage remain disputed. Results: The current study combined genetic lineage tracing with in vitro small-molecule-based reprogramming to define liver progenitor cells (LPCs) derived from hepatic parenchymal and non-parenchymal tissues. tdTom+ hepatocytes were isolated from ROSA26tdTomato mice following AAV8-Tbg-Cre-mediated recombination, EpCAM+ biliary epithelial cells (BECs) from wild-type intrahepatic bile ducts and ALB/GFP−EpCAM− cells were isolated from AlbCreERT/R26GFP mice. A cocktail of small molecules was used to convert the isolated cells into LPCs. These in vitro cultured LPCs with CD24 and SOX9 expression regained the ability to proliferate. Transcriptional profiling showed that the in-vitro cultured LPCs derived from the resident LPCs in non-parenchymal tissues expressed Lipocalin-2 (Lcn2) at high levels. Accordingly, endogenous Cd24a+Lcn2+ LPCs were identified by integration of sc-RNA-sequencing and pathological datasets of liver dysfunction which indicates that LPCs produced by ductular reactions might also originate from the resident LPCs. Transplantation of in-vitro cultured Cd24a+Lcn2+ LPCs into CCl4-induced fibrotic livers exacerbated liver damage and dysfunction, possibly due to LCN2-dependent macrophage inflammatory response. Conclusions: CD24+LCN2+ LPCs constituted the expanding ductular reaction and contributed to macrophage-mediated inflammation in chronic liver damage. The current findings highlight the roles of LPCs from distinct origins and expose the possibility of targeting LPCs in the treatment of chronic hepatic diseases. [ABSTRACT FROM AUTHOR]