The CCAAT enhancer‐binding protein (C/EBP) β gene can produce several N‐terminally truncated isoforms. Liver‐enriched activator protein (LAP) is a transcriptional activator in many systems, whereas liver‐enriched inhibitory protein (LIP) is regarded as a functional LAP antagonist. In this study, we examined the impact of these two proteins on cell cycle progression in the regenerating liver. Adenoviral overexpression of LAP, in addition to its role as a transactivator of liver‐specific genes, led to a delayed S‐phase entry of hepatocytes after partial hepatectomy (PH) in vivo. This delay was accompanied by decreased expression of cyclin A and E as well as proliferating cell nuclear antigen and decreased cyclin‐dependent kinase 2 activity at the G1/S boundary. This observation is not explained by increased p21^CIP1/Waf1 expression or lack of phosphorylation of external LAP, but LAP overexpression triggered a decreased C/EBP‐α/C/EBP‐α‐30 ratio and a reduced basal c‐jun level in the liver. In contrast, adenoviral overexpression of LIP resulted in a stronger and earlier induction of cyclin A and E after PH, but did not change the timing and extent of cyclin‐dependent kinase 2 activity or the amount of hepatocytes that entered S phase in this model. In the LIP expressing group, both C/EBP‐α isoforms and c‐jun were more strongly induced after PH. In conclusion, the LAP/LIP ratio is an important modulator of cell cycle progression during liver regeneration. In the context of previous studies, our results demonstrate that LAP, through a dose‐dependent effect, withholds a dual activating and inhibiting role on hepatocyte proliferation in vivo. (HEPATOLOGY 2004;40:356–365.)