A review of the morphologic, autoradiographic, and phenotypic analysis of the cellular changes seen during induction of cancer of the liver in rats by chemical carcinogens is used to develop an alternative to the established hypothesis that chemically induced hepatocellular carcinoma arises from premalignant nodules. The authors propose that hepatocellular and ductular carcinomas arise from a pluripotent liver stem cell and that enzyme-altered foci and nodular changes are adaptive non-oncogenic responses to the toxic effects of carcinogens. It is further postulated that persistent nodules may provide an environment that nurtures development of neoplastic cells other than the altered hepatocytes that originally form the nodule. It is possible, however, that there may be more than one cellular lineage to hepatocellular cancer and that persistent nodules contain these different lineages.