Mice lacking the AP‐1 transcription factor c‐jun die at mid‐gestation showing heart defects and impaired hepatogenesis. To inactivate c‐jun in hepatocytes, mice carrying a floxed c‐jun allele were generated. Perinatal liver‐specific c‐jun deletion caused reduced hepatocyte proliferation and decreased body size. After partial hepatectomy, half of the mutants died and liver regeneration was impaired. This phenotype was not present in mice lacking the N‐terminal phosphorylation sites of c‐Jun. The failure to regenerate was accompanied by increased cell death and lipid accumulation in hepatocytes. Moreover, cyclin‐dependent kinases and several cell cycle regulators were affected, resulting in inefficient G 1–S phase progression. These studies identify c‐Jun as a critical regulator of hepatocyte proliferation and survival during liver development and regeneration.