Compensatory proliferation triggered by hepatocyte loss is required for liver regeneration and maintenance but also promotes development of hepatocellular carcinoma (HCC). Despite extensive investigation, the cells responsible for hepatocyte restoration or HCC development remain poorly characterized. We used genetic lineage tracing to identify cells responsible for hepatocyte replenishment following chronic liver injury and queried their roles in three distinct HCC models. We found that a pre-existing population of periportal hepatocytes, located in the portal triads of healthy livers and expressing low amounts of Sox9 and other bile-duct-enriched genes, undergo extensive proliferation and replenish liver mass after chronic hepatocyte-depleting injuries. Despite their high regenerative potential, these so-called hybrid hepatocytes do not give rise to HCC in chronically injured livers and thus represent a unique way to restore tissue function and avoid tumorigenesis. This specialized set of pre-existing differentiated cells may be highly suitable for cell-based therapy of chronic hepatocyte-depleting disorders. Display omitted •Hybrid hepatocytes (HybHP) constitutively reside in portal triads of healthy liver•HybHP can replenish the entire parenchyma after chronic hepatocyte damage•Despite multiple divisions, HybHP do not originate HCC in three independent models•HybHP exhibit unmatched regenerative capacity in a diseased liver Hybrid hepatocytes (HybHP) are a subpopulation of periportal hepatocytes that are present in the healthy liver and that undergo extensive proliferation and replenish liver mass after chronic hepatocyte-depleting injuries without giving rise to hepatocellular carcinoma. Isolated HybHP display an unmatched capacity to restore liver function after transplantation into a diseased liver, underscoring their therapeutic potential.