The liver has been generally considered an organ prone to tolerance induction and maintenance. However, whether and how the unique liver microenvironment contributes to tolerance maintenance is largely unknown. Here, we used liver fibroblastic stromal cells to mimic the liver microenvironment and found that liver stroma could induce Lin⁻CD117⁺ progenitors to differentiate into dendritic cells (DCs) with low CD11c, MHC II but high CD11b expression, high IL-10, but low IL-12 secretion. Such regulatory DCs could inhibit T-cell proliferation in vitro and in vivo, induce apoptosis of the activated T cells, and alleviate the damage of autoimmune hepatitis. Furthermore, liver stroma–derived macrophage colony-stimulating factor (M-CSF) was found to contribute to the generation of such regulatory DCs. Regulatory DC–derived PGE2 and T cell–derived IFN-gamma were responsible for the regulatory function. The natural counterpart of regulatory DCs was phenotypically and functionally identified in the liver. Importantly, Lin⁻CD117⁺ progenitors could be differentiated into regulatory DCs in the liver once transferred into the liver. Infusion with liver regulatory DCs alleviated experimental autoimmune hepatitis. Therefore, we demonstrate that the liver microenvironment is highly important to program progenitors to differentiate into regulatory DCs in situ, which contributes to the maintenance of liver tolerance.