Molecular events preceding the development of hepatocellular carcinoma were studied in the Mdr2-knockout (Mdr2-KO) mice. These mice lack the liver-specific P-glycoprotein responsible for phosphatidylcholine transport across the canalicular membrane. Portal inflammation ensues at an early age followed by hepatocellular carcinoma development after the age of 1 year. Liver tissue samples of Mdr2-KO mice in the early and late precancerous stages of liver disease were subjected to histologic, biochemical, and gene expression profiling analysis. In an early stage, multiple protective mechanisms were found, including induction of many anti-inflammatory and antioxidant genes and increase of total antioxidant capacity of liver tissue. Despite stimulation of hepatocyte DNA replication, their mitotic activity was blocked at this stage. In the late stage of the disease, although the total antioxidant capacity of liver tissue of Mdr2-KO mice was normal, and inflammation was less prominent, many protective genes remained overexpressed. Increased mitotic activity of hepatocytes resulted in multiple dysplastic nodules, some of them being steatotic. Expression of many genes regulating lipid and phospholipid metabolism was distorted, including up-regulation of choline kinase A, a known oncogene. Many other oncogenes, including cyclin D1, Jun, and some Ras homologues, were up-regulated in Mdr2-KO mice at both stages of liver disease. However, we found no increase of Ras activation. Our data suggest that some of the adaptive mechanisms induced in the early stages of hepatic disease, which protect the liver from injury, could have an effect in hepatocarcinogenesis at later stages of the disease in this hepatocellular carcinoma model.