Regulatory T cells (Tregs) contribute significantly to the tolerogenic nature of the liver. The mechanisms, however, underlying liver-associated Treg induction are still elusive. We recently identified the vitamin A metabolite, retinoic acid (RA), as a key controller that promotes TGF-β-dependent Foxp3(+) Treg induction but inhibits TGF-β-driven Th17 differentiation. To investigate whether the RA producing hepatic stellate cells (HSC) are part of the liver tolerance mechanism, we investigated the ability of HSC to function as regulatory APC. Different from previous reports, we found that highly purified HSC did not express costimulatory molecules and only upregulated MHC class II after in vitro culture in the presence of exogenous IFN-γ. Consistent with an insufficient APC function, HSC failed to stimulate naive OT-II TCR transgenic CD4(+) T cells and only moderately stimulated α-galactosylceramide-primed invariant NKT cells. In contrast, HSC functioned as regulatory bystanders and promoted enhanced Foxp3 induction by OT-II TCR transgenic T cells primed by spleen dendritic cells, whereas they greatly inhibited the Th17 differentiation. Furthermore, the regulatory bystander capacity of the HSC was completely dependent on their ability to produce RA. Our data thus suggest that HSC can function as regulatory bystanders, and therefore, by promoting Tregs and suppressing Th17 differentiation, they might represent key players in the mechanism that drives liver-induced tolerance.