A significant proportion of patients with hepatocellular carcinoma (HCC) are infected with hepatitis C virus (HCV). This finding suggests that HCV infection is a major risk factor for the development of HCC. It is presently unclear whether HCV has a direct oncogenic effect on infected hepatocytes or whether continuous cell regeneration due to the chronic necroinflammatory process predisposes hepatocytes to mutations and malignant transformation. Except for rare cases, HCC in chronic HCV infection is always associated with cirrhosis. We examined a series of 138 consecutive cirrhotic livers with chronic hepatitis C that had been removed during transplantation for evidence of macroregenerative nodules (MRNs), liver cell dysplasia of large and small cell types, and HCC. MRNs and liver cell dysplasia are currently considered to be precursors of HCC. HCCs were present in 38 livers (28%) and were multifocal in half of the cases. MRNs were identified in 34 livers (25%). The number of MRNs ranged from 1 to 5 in 28 patients and was greater than 5 in 6 patients. In 14 of 34 livers with MRNs, there were associated HCCs (41%). Eight MRNs contained microscopic HCC. No microscopic HCC was found outside of MRNs; however, grossly apparent HCCs might have arisen from MRNs. Large liver cell dysplasia (LLCD) was frequently observed. It was present in 97 livers (70%) with or without MRNs and/or HCCs. Small liver cell dysplasia (SLCD) was seen in 8 livers with MRNs and/or HCCs and in 1 liver without MRN and HCC. These findings suggest that in chronic HCV infection, multifocal HCC is often found. MRN may represent one pathway in hepatocarcinogenesis. LLCD, similar to that found in chronic hepatitis B virus (HBV) infection, is a common finding in HCV-infected livers with cirrhosis, and appears not to be directly related to the development of HCC. SLCD is rarely seen, but may represent an important step in malignant transformation.