We have previously demonstrated that 40%‐70% of elf^+/− mice spontaneously develop hepatocellular cancer (HCC) within 15 months, revealing the importance of the transforming growth factor‐beta (TGF‐β) signaling pathway in suppressing tumorigenesis in the liver. The current study was carried out to investigate mechanisms by which embryonic liver fodrin (ELF), a crucial Smad3/4 adaptor, suppresses liver tumor formation. Histological analysis of hyperplastic liver tissues from elf^+/− mice revealed abundant newly formed vascular structures, suggesting aberrant angiogenesis with loss of ELF function. In addition, elf^+/− mice displayed an expansion of endothelial progenitor cells. Ectopic ELF expression in fetal bovine heart endothelial (FBHE) cells resulted in cell cycle arrest and apoptosis. Further analysis of developing yolk sacs of elf^−/− mice revealed a failure of normal vasculature and significantly decreased endothelial cell differentiation with embryonic lethality. Immunohistochemical analysis of hepatocellular cancer (HCC) from the elf^+/− mice revealed an abnormal angiogenic profile, suggesting the role of ELF as an angiogenic regulator in suppressing HCC. Lastly, acute small interfering RNA (siRNA) inhibition of ELF raised retinoblastoma protein (pRb) levels nearly fourfold in HepG2 cells (a hepatocellular carcinoma cell line) as well as in cow pulmonary artery endothelial (CPAE) cells, respectively. Conclusion: Taken together these results, ELF, a TGF‐β adaptor and signaling molecule, functions as a critical adaptor protein in TGF‐β modulation of angiogenesis as well as cell cycle progression. Loss of ELF in the liver leads the cancer formation by deregulated hepatocyte proliferation and stimulation of angiogenesis in early cancers. Our studies propose that ELF is potentially a powerful target for mimetics enhancing the TGF‐β pathway tumor suppression of HCC. (HEPATOLOGY 2008.)