Liver disease is a major global health-care problem, affecting an estimated 844 million people worldwide. Despite this substantial burden, therapeutic options for liver disease remain limited, in part owing to a paucity of detailed analyses defining the cellular and molecular mechanisms that drive these conditions in humans. Single-cell transcriptomic technologies are transforming our understanding of cellular diversity and function in health and disease. In this Review, we discuss how these technologies have been applied in hepatology, advancing our understanding of cellular heterogeneity and providing novel insights into fundamental liver biology such as the metabolic zonation of hepatocytes, endothelial cells and hepatic stellate cells, and the cellular mechanisms underpinning liver regeneration. Application of these methodologies is also uncovering critical pathophysiological changes driving disease states such as hepatic fibrosis, where distinct populations of macrophages, endothelial cells and mesenchymal cells reside within a spatially distinct fibrotic niche and interact to promote scar formation. In addition, single-cell approaches are starting to dissect key cellular and molecular functions in liver cancer. In the near future, new techniques such as spatial transcriptomics and multiomic approaches will further deepen our understanding of disease pathogenesis, enabling the identification of novel therapeutic targets for patients across the spectrum of liver diseases.