Mallory-Denk bodies (MDBs) are hepatocyte inclusions that are associated with poor liver disease prognosis. The intermediate filament protein keratin 8 (K8) and its cross-linking by transglutaminase-2 (TG2) are essential for MDB formation. K8 hyperphosphorylation occurs in association with liver injury and MDB formation, but the link between keratin phosphorylation and MDB formation is unknown. We used a mutational approach to identify K8 Q70 as a residue that is important for K8 cross-linking to itself and other liver proteins. K8 cross-linking is markedly enhanced on treating cells with a phosphatase inhibitor and decreases dramatically on K8 S74A or Q70N mutation in the presence of phosphatase inhibition. K8 Q70 cross-linking, in the context of synthetic peptides or intact proteins transfected into cells, is promoted by phosphorylation at K8 S74 or by an S74D substitution and is inhibited by S74A mutation. Transgenic mice that express K8 S74A or a K8 G62C liver disease variant that inhibits K8 S74 phosphorylation have a markedly reduced ability to form MDBs. Our findings support a model in which the stress-triggered phosphorylation of K8 S74 induces K8 cross-linking by TG2, leading to MDB formation. These findings may extend to neuropathies and myopathies that are characterized by intermediate filament-containing inclusions.