Abstract: Objective To investigate the changes of tumor necrosis factor-α (TNF-α) and transforming growth factor-β1 (TGF-β1) in mice with cholestatic cirrhosis and their role in regulating the balance of liver stem cell differentiation. Methods Balb/c mice were subjected to bile duct ligation (BDL), and serum biochemical parameters were measured and hepatic histopathology was observed using HE staining to evaluate the modeling of cholestatic cirrhosis. Immunohistochemistry and Western blotting were used to detect the changes of TNF-α and TGF-β1 in the mice after modeling. Mouse embryonic hepatic stem cells (HP14-19) were treated with different concentrations of TNF-α and TGF-β1, and the cell differentiation was assessed using Western blotting, real-time PCR, and PAS staining. Results The mice receiving BDL showed significantly increased blood biochemical parameters (P<0.05), and HE staining revealed obviously increased collagen fibers in the liver with significantly increased expressions of TNF-α and TGF-β1 (P<0.05). In HP14-19 cells, induction with TNF-α and TGF-β1 for 3 days did not cause significant changes in cell differentiation, but induction for 5 days resulted in significantly increases intensity of PAS staining in the cells. The cells induced with 20, 40, and 80 ng/mL TNF-α for 5 days exhibited a significantly stronger expression of cytokeratin 18 than cytokeratin 19 (P<0.05), while induction with 20, 40, and 80 ng/mL TGF-β1 produced opposite changes in cytokeratin 18 and cytokeratin 19 expressions. Further induction of the cells with TNF-α and TGF-β1 for 10 days, did not alter the expression patterns of cytokeratin 18 and cytokeratin 19 observed on day 5, but their protein expression levels and PAS staining intensity of the cells were enhanced and their mRNA expressions became lowered. Conclusion Common bile duct ligation can induce conditions simulating cholestatic cirrhosis in mice. TNF-α and TGF-β1 are elevated in cholestatic cirrhosis and play opposite roles in regulating the differentiation balance of liver stem cells: the former promotes the differentiation of liver stem cells into hepatocytes, while the latter promotes the cell differentiation into colangiocytes.