Telomeres shorten progressively with age in normal somatic cells in culture and in vivo. The maintenance of telomere length is assumed to be an obligatory step in the progression and immortalization of most human tumor cells. To understand the role of telomere dynamics in the development of hepatocellular carcinoma (HCC), we examined the length of terminal restriction fragment (TRF), as an indicator for telomere length, in HCC and surrounding tissues with chronic active hepatitis (CAH) or liver cirrhosis (LC). The study was performed in 12 hepatitis C virus (HCV) antibody-positive, 12 hepatitis B virus (HBV) antigen-positive tissues, and 4 tissue samples from virus-negative patients with HCC. The peak TRFs in all 3 types of HCC were significantly shorter than those of the surrounding tissues (i.e., LC or CAH). TRFs examined in one patient with atypical adenomatous hyperplasia (AAH) also was shortened. Thus, progressive TRF shortening occurs from normal to CAH to LC to HCC(AAH). Telomerase, an enzyme that adds repeated telomere sequences onto the chromosome ends and stabilizes telomere length in immortal cells, also was examined in tissues and detected in high levels almost exclusively in HCCs. Interestingly, the intensity of telomerase activity in the AAH case was similar to that of HCC. In addition, the telomerase activity of biopsy samples with a fine 21-gauge needle also was examined in 10 HCCs, 2 adenomatous hyperplasias (AHs), 2 LCs, and 2 CAHs. We found strong telomerase activity in all the HCCs and surprisingly in the 2 cases that were pathologically diagnosed as AH. Thus, the findings strongly suggest that persistent cell proliferation or rapid cell turnover through damage of hepatic cells result in a process of multistep hepatocellular carcinogenesis. Thus, progressive shortening of telomeres and the activation of telomerase may be a useful marker for the early detection of malignant progression in liver disease.