After liver injury, regeneration manifests as either (1) hepatocytes proliferating to restore the lost hepatocyte mass or (2) if hepatocyte proliferation is compromised, biliary epithelial cells (BECs) dedifferentiating into liver progenitor cells (LPCs), which subsequently differentiate into hepatocytes. Following pharmacogenetic ablation of hepatocytes in Tg(fabp10a:CFP-NTR) zebrafish, resulting in severe liver injury, signal transducer and activator of transcription 3 (Stat3) and its target gene and negative regulator, socs3a, were upregulated in regenerating livers. Using either Stat3 inhibitors, JSI-124 and S3I-201, or stat3 zebrafish mutants, we investigated the role of Stat3 in LPC-driven liver regeneration. Although Stat3 suppression reduced the size of regenerating livers, BEC dedifferentiation into LPCs was unaffected. However, regenerating livers displayed a delay in LPC-to-hepatocyte differentiation and a significant reduction in the number of BECs. While no difference in cell death was detected, Stat3 inhibition significantly reduced LPC proliferation. Notably, stat3 mutants phenocopied the effects of Stat3 chemical inhibitors, although the mutant phenotype was incompletely penetrant. Intriguingly, a subset of socs3a mutants also displayed a lower number of BECs in regenerating livers. We conclude that the Stat3/Socs3a pathway is necessary for the proper timing of LPC-to-hepatocyte differentiation and establishing the proper number of BECs during LPC-driven liver regeneration.