To analyze the process of liver regeneration and the initiation of hepatocellular carcinoma (HCC), we studied histochemically the morphologic features of proliferating parenchymal cells stained for DNA polymerase alpha (DPA), in 31 patients with various diseases, by use of a monoclonal antibody against DPA. In specimens from patients with acute viral hepatitis with confluent necrosis, most stained hepatocytes were small, with basophilic cytoplasm, and were located next to the necrotic areas. Under electron microscopy, stained granules were seen in the nucleus. Most stained hepatocytes had immature organelles. In specimens from patients with cirrhosis of the liver, the number of stained hepatocytes greatly differed in different pseudolobules. In specimens from patients with adenomatous hyperplasia, stained hepatocytes, mostly small and basophilic, were found diffusely; electron microscopy showed slightly indented nuclei with a few organelles and less condensed chromatin than normal. In specimens from patients with HCC, most stained cancer cells were small and basophilic; electron microscopy showed indented nuclei with a few organelles and less than normal condensed chromatin. Staining showed that during regeneration, immature hepatocytes reentered the cell cycle and repaired a large necrotic area. It was conceivable that in the initiation of HCC, some small hepatocytes with indented nuclei and less condensed chromatin might become HCC cells.