This report shows that loss of heterozygosity at the mannose 6-phosphate/insulin-like growth factor II receptor (M6P/IGF2R) locus occurred in 5/8 (63%) dysplastic liver lesions and 11/18 (61%) hepatocellular carcinomas (HCCs) associated with the high risk factors of hepatitis virus infection and liver cirrhosis. Mutations in the remaining allele were detected in 6/11 (55%) HCCs, including deletions in a polydeoxyguanosine region known to be a target of microsatellite instability. M6P/IGF2R allele loss was also found in cirrhotic tissue of clonal origin adjacent to these dysplastic lesions and HCCs, demonstrating that M6P/IGF2R inactivation occurs early in liver carcinogenesis. In conclusion, HCCs frequently develop from clonal expansions of phenotypically normal, M6P/IGF2R-mutated hepatocytes, providing further support for the idea that M6P/IGF2R functions as a liver tumor-suppressor gene.