To identify the preneoplastic lesions of hepatocellular carcinoma and the fine structure of preneoplastic hepatocytes, we studied proliferative conditions in cirrhosis of the liver. In all, 46 foci of cellular alteration (FCA), three regions of adenomatous hyperplasia (ADH), and 21 small hepatocellular carcinomas (sHCC) were studied by published criteria for sHCC and by the proliferative activity of the lesions as examined with monoclonal antibodies against DNA polymerase alpha and proliferating cell nuclear antigen. The four patients with FCA composed of basophilic hepatocytes were classified by the criteria as having sHCC; cells had features similar to those of sHCC. Two of these four patients with FCA were found to have HCC several years later. The number of hepatocytes stained for proliferating cell nuclear antigen was 72 and 81 per 1000 hepatocyte nuclei in the two patients who developed HCC. In one of the three patients with ADH, a sHCC was found 1 year later, and dysplastic hepatocytes from the region of ADH in this patient had features similar to those of HCC cells by light and electron microscopy. In this patient, the number of hepatocytes stained for DNA polymerase alpha was 452 per 1000 nuclei. Therefore, FCA and ADH might be preneoplastic lesions of sHCC in cirrhosis of the liver. Preneoplastic hepatocytes seem to be small cells with basophilic cytoplasm, with a large nucleus to cytoplasm ratio, finely indented nuclei with a smaller amount of condensed chromatin than normal, and poorly to moderately developed organelles.