This study was designed to show whether rat liver epithelial cells could undergo epithelial-mesenchymal transition (EMT), thereby directly contributing to liver fibrosis. The role of the ratio of transforming growth factor-β1 (TGF-β1)/bone morphogenetic protein-7 (BMP-7) was evaluated in the progression of EMT or mesenchymal-epithelial transition. Primary rat liver epithelial cells were stimulated with different ratios of TGF-β1/BMP-7 and examined for evidence of transition to a mesenchymal or epithelial phenotype. Liver sections were labeled to detect antigens associated with liver epithelial cells [E-cadherin (E-cad)], EMT [fibroblast-specific protein-1 (FSP-1), vimentin], myofibroblasts [α-smooth muscle actin (α-SMA)], and intracellular signal-transduction mediated by forming liver fibrosis undergo EMT, resulting in the formation of invasive fibroblasts; this process may be driven or impeded by a response to local TGF-β1 or BMP-7. BMP-7 downregulated α-SMA and phosphorylated Smad2/3. Stimulation of cultured cells with TGF-β1 induced the expression of pSmad2/3, FSP-1, and α-SMA. Stimulation of cultured cells with BMP-7 induced the expression of E-cad. We demonstrated that the cells upregulated E-cad release compared with untreated cells, but TGF-β1 was different. We found that the equilibrium of the ratio of TGF-β1/BMP-7 was 1/10. In summary, the mechanism for this process was not determined. Demonstration of the contribution of what the ratio of TGF-β1/BMP-7 induced to EMT to the chronic liver diseases would provide a new basis for understanding pathogenesis and potential treatment.