Sublobular nodules of hepatocytes free of iron or exhibiting much less iron than the surrounding parenchyma, referred to in this study as iron-free-foci, are frequently found in the livers of patients with genetic hemochromatosis complicated by hepatocellular carcinoma. To test the hypothesis that such nodules are preneoplastic lesions, iron-free foci were sought in the initial liver biopsy specimens of 185 patients with untreated and uncomplicated genetic hemochromatosis. Iron-free foci were found in 14 (7.6%) patients, all men, aged from 38 to 76 yr, with heavy iron overload and with fibrosis or cirrhosis. Twelve patients with iron-free foci were followed for 0.9 to 15 yr (7 +/- 6 yr). In six (50%), HCC developed, compared with 2 (8%) from a control group consisting of 24 patients without IFF matched according to age, sex, degree of fibrosis, liver iron amount and follow-up duration. The mean number of iron-free foci per iron-free foci-positive specimen was 3.2 +/- 2.1. Ten patients had dysplastic aspects in their iron-free foci, and four had intrahepatocytic iron-positive inclusions at the periphery of iron-free foci. Proliferative cell nuclear antigen was positive in 75% of iron-free foci and in 24% +/- 21% of hepatocyte nuclei in iron-free foci. This study clearly demonstrates that iron-free foci are proliferative lesions and strongly suggests that such nodules are preneoplastic foci. Therefore the finding of IFF in the initial liver biopsy specimen from a patient with genetic hemochromatosis should lead to regular screening for hepatocellular carcinoma.