The concept that hepatocellular cancer (HCC) arises by dedifferentiation of mature hepatocytes is challenged by more recent interpretations indicating that HCC arises from arrested maturation of determined stem cells. Either hypothesis is supported by the cellular changes that occur in the rodent liver following different hepatocarcinogenic regimens. The formation of foci and nodules from altered hepatocytes supports dedifferentiation; the proliferation of small "oval" cells with the potential to differentiate into either biliary ducts or hepatocytes supports arrested maturation of determined stem cells. The stem cell model predicts that genotoxic chemicals induce in the determined stem cell mutations that may be expressed in its progeny. Promoting agents act by inducing cell proliferation and increasing the chances for the additional mutations needed for expression of the malignant phenotype in proliferating progeny of the stem cell. Events which increase hepatocyte proliferation, such as cirrhosis or hepatitis B infection, may allow the number of critical mutations to occur in the absence of exposure to an external carcinogen. Exposure to hepatocarcinogens, such as aflatoxin, or integration of virus DNA, such as in hepatitis B infection, may produce transforming mutations. However, these mutations are most likely not sufficient to cause cancer, but are potentiated by increased endogenous mutations that occur when proliferation is increased, leading to very high incidence of HCC in areas in which there is endemic hepatitis B and aflatoxin contamination of the diet.