Mitochondrial nitric oxide synthase (mtNOS) is a fine regulator of oxygen uptake and reactive oxygen species that eventually modulates the activity of regulatory proteins and cell cycle progression. From this perspective, we examined liver mtNOS modulation and mitochondrial redox changes in developing rats from embryonic days 17–19 and postnatal day 2 (proliferating hepatocyte phenotype) through postnatal days 15–90 (quiescent phenotype). mtNOS expression and activity were almost undetectable in fetal liver, and progressively increased after birth by tenfold up to adult stage. NO‐dependent mitochondrial hydrogen peroxide (H₂O₂) production and Mn‐superoxide dismutase followed the developmental modulation of mtNOS and contributed to parallel variations of cytosolic H₂O₂ concentration ([H₂O₂]_ss) and cell fluorescence. mtNOS‐dependent [H₂O₂]_ss was a good predictor of extracellular signal–regulated kinase (ERK)/p38 activity ratio, cyclin D1, and tissue proliferation. At low 10⁻¹¹–10⁻¹² M [H₂O₂]_ss, proliferating phenotypes had high cyclin D1 and phospho‐ERK1/2 and low phospho‐p38 mitogen‐activated protein kinase, while at 10⁻⁹ M [H₂O₂]_ss, quiescent phenotypes had the opposite pattern. Accordingly, leading postnatal day 2–isolated hepatocytes to embryo or adult redox conditions with H₂O₂ or NO‐H₂O₂ scavengers, or with ERK inhibitor U0126, p38 inhibitor SB202190 or p38 activator anisomycin resulted in correlative changes of ERK/p38 activity ratio, cyclin D1 expression, and [³H] thymidine incorporation in the cells. Accordingly, p38 inhibitor SB202190 or N‐acetyl‐cysteine prevented H₂O₂ inhibitory effects on proliferation. In conclusion, the results suggest that a synchronized increase of mtNOS and derived H₂O₂ operate on hepatocyte signaling pathways to support the liver developmental transition from proliferation to quiescence. (HEPATOLOGY 2004;40:157–166.)