Inflammation enables human cancers and is a critical promoter of hepatocellular carcinoma (HCC). TIMP3 (Tissue inhibitor of metalloproteinase 3), a natural metalloproteinase inhibitor, controls cytokine and growth factor bioavailability to keep inflammation in check and regulate cell survival in the liver. TIMP3 is also found silenced in human cancers. We therefore tested whether Timp3 affects HCC predisposition. Remarkably, genetic loss of Timp3 protected from carcinogen-induced HCC through the immediate engagement of several tumor suppressor pathways, while tumor necrosis factor (TNF) signaling was dispensable for this protection. All wild-type mice developed HCC by 12 months, whereas HCC incidence was reduced to 33% at 12 months and 57% at 15 months in Timp3 null mice. Upon acute carcinogen treatment the deficient livers exhibited greater cytokine expression, but lower cell death and higher hepatocyte senescence. We found that precocious activation of p53, p38 and Notch preceded senescence and hepatic cell differentiation, and these events were conserved throughout tumorigenesis. Timp3-deficient mouse embryo fibroblasts also responded to carcinogen by favoring senescence over apoptosis. We conclude that Timp3 status determines p53, p38 and Notch coactivation to instruct hepatic cell fate and transformation and uncover mechanisms that are protective even within a pro-inflammatory microenvironment.