In the last decade, careful examination of explanted cirrhotic livers in liver transplant centers around the world has confirmed the findings of the earlier Japanese investigators: DNs (by this or any other name) represent hepatic, premalignant lesions in chronic liver disease. Careful examination of their gross and microscopic morphologies has led to the hypothesis of precirrhotic, spreading clonal expansions that are resistent to scarring, and that result in neoplastic islands of hepatic parenchyma. The resultant distinctive nodules, often marked by features suggestive of their clonality (such as increased pigment), are at increased risk for subsequent carcinomatous events, thereby giving rise to HCC. Specialized molecular and immunohistochemical studies confirm many aspects of this hypothesis. In suggesting that some aspects of DN pathophysiology are not integral to the carcinogenetic pathway (i.e., inhibition of HSC inactivation), this hypothesis serves a broader purpose, explaining the various settings in which early HCCs are found in cirrhotic explants and in wedge resections of radiographically defined lesions. Discrepancies between Japanese and non-Japanese investigations regarding dysplasia and early HCCs reflect not different biologic pathways but differences in detection, interpretation, and application of nomenclature. These differences may fade away as more international collaborative work brings investigators of diverse nationalities into regular contact, supporting movement toward a commonly acceptable nomenclature and set of diagnostic criteria. Ultimately, an understanding of the pathophysiology of these lesions, through more detailed molecular and physiologic studies, should lead to more efficient and available early detection, and perhaps chemoprevention approaches to hepatic malignancy.