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Background:. α1-antitrypsin deficiency is most commonly caused by a mutation in exon-7 of SERPINA1 (SA1-ATZ), resulting in hepatocellular accumulation of a misfolded variant (ATZ). Human SA1-ATZ-transgenic (PiZ) mice exhibit hepatocellular ATZ accumulation and liver fibrosis. We hypothesized that disrupting the SA1-ATZ transgene in PiZ mice by in vivo genome editing would confer a proliferative advantage to the genome-edited hepatocytes, enabling them to repopulate the liver. Methods:. To create a targeted DNA break in exon-7 of the SA1-ATZ transgene, we generated 2 recombinant adeno-associated viruses (rAAV) expressing a zinc-finger nuclease pair (rAAV-ZFN), and another rAAV for gene correction by targeted insertion (rAAV-TI). PiZ mice were injected i.v. with rAAV-TI alone or the rAAV-ZFNs at a low (7.5×1010vg/mouse, LD) or a high dose (1.5×1011vg/mouse, HD), with or without rAAV-TI. Two weeks and 6 months after treatment, livers were harvested for molecular, histological, and biochemical analyses. Results:. Two weeks after treatment, deep sequencing of the hepatic SA1-ATZ transgene pool showed 6%±3% or 15%±4% nonhomologous end joining in mice receiving LD or HD rAAV-ZFN, respectively, which increased to 36%±12% and 36%±12%, respectively, 6 months after treatment. Two weeks postinjection of rAAV-TI with LD or HD of rAAV-ZFN, repair by targeted insertion occurred in 0.10%±0.09% and 0.25%±0.14% of SA1-ATZ transgenes, respectively, which increased to 5.2%±5.0% and 33%±13%, respectively, 6 months after treatment. Six months after rAAV-ZFN administration, there was a marked clearance of ATZ globules from hepatocytes, and resolution of liver fibrosis, along with reduction of hepatic TAZ/WWTR1, hedgehog ligands, Gli2, a TIMP, and collagen content. Conclusions:. ZFN-mediated SA1-ATZ transgene disruption provides a proliferative advantage to ATZ-depleted hepatocytes, enabling them to repopulate the liver and reverse hepatic fibrosis.