Etiologic risk factors for hepatocellular carcinoma can be involved in the transformation process by directly targeting intracellular signaling pathways or by indirectly stimulating chronic cycles of hepatocyte destruction and regeneration. However, the contribution of these two routes to hepatocarcinogenesis has not been determined, partly because of the difficulty in distinguishing damaged and regenerated hepatocytes. Here we report that induced deletion of the damaged DNA binding protein 1 (DDB1) abrogates the self-renewing capacity of hepatocytes, resulting in compensatory proliferation of DDB1-expressing hepatocytes. Constitutive stimulation of this regeneration process leads to development of hepatocellular carcinoma, which surprisingly contains no disruption of the DDB1 gene, indicating a cell-nonautonomous role of DDB1 inactivation in tumor initiation. Our results suggest that viruses and hepatoxins may cause liver tumors by simply driving hepatocyte turnover without directly targeting cancer cells.