Hepatic stellate cells (HSCs) are recognized as a major player in liver fibrogenesis. Upon liver injury, HSCs differentiate into myofibroblasts and participate in progression of fibrosis and cirrhosis. Additional cell types such as resident liver fibroblasts/myofibroblasts or bone marrow cells are also known to generate myofibroblasts. One of the major obstacles to understanding the mechanism of liver fibrogenesis is the lack of knowledge regarding the developmental origin of HSCs and other liver mesenchymal cells. Recent cell lineage analyses demonstrate that HSCs are derived from mesoderm during liver development. MesP1-expressing mesoderm gives rise to the septum transversum mesenchyme before liver formation and then to the liver mesothelium and mesenchymal cells, including HSCs and perivascular mesenchymal cells around the veins during liver development. During the growth of embryonic liver, the mesothelium, consisting of mesothelial cells and submesothelial cells, migrates inward from the liver surface and gives rise to HSCs and perivascular mesenchymal cells, including portal fibroblasts, smooth muscle cells around the portal vein, and fibroblasts around the central vein. Cell lineage analyses indicate that mesothelial cells are HSC progenitor cells capable of differentiating into HSCs and other liver mesenchymal cells during liver development.