Hepatic stem cells (oval cells) proliferate within the liver after exposure to a variety of hepatic carcinogens and can generate both hepatocytes and bile duct cells. Oval cell proliferation is commonly seen in the preneoplastic stages of liver carcinogenesis, often accompanied by an inflammatory response. Tumor necrosis factor (TNF), an inflammatory cytokine, is also important in liver regeneration and hepatocellular growth. The experiments reported here explore the relationship among the TNF inflammatory pathway, liver stem cell activation, and tumorigenesis. We demonstrate that TNF is upregulated during oval cell proliferation induced by a choline-deficient, ethionine-supplemented diet and that it is expressed by oval cells. In TNF receptor type 1 knockout mice, oval cell proliferation is substantially impaired and tumorigenesis is reduced. Oval cell proliferation is impaired to a lesser extent in interleukin 6 knockout mice and is unchanged in TNF receptor type 2 knockout mice. These findings demonstrate that TNF signaling participates in the proliferation of oval cells during the preneoplastic phase of liver carcinogenesis and that loss of signaling through the TNF receptor type 1 reduces the incidence of tumor formation. The TNF inflammatory pathway may be a target for therapeutic intervention during the early stages of liver carcinogenesis.