Z mutant–associated α₁‐antitrypsin deficiency in human beings leads to hepatitis and, in some cases, hepatocellular carcinoma. To begin to delineate the molecular basis for the development of hepatocellular carcinoma in α₁‐antitrypsin deficiency, we previously developed transgenic mice using human α₁‐antitrypsin M and Z genomic clones. High‐copy Z lineage mice (12 gene copies/haploid mouse genome; “Z#2”) had hepatocytes distended with human α₁‐antitrypsin deficiency globules. Hepatitis was present, and the morphological changes mimicked those observed in human α₁‐antitrypsin deficiency‐related liver disease. The numbers of hepatocytes containing α₁‐antitrypsin globules decreased with age, and α₁‐antitrypsin‐negative nodular aggregates of hepatocytes increased in number and size. Hepatocytic dysplasia occurred as early as 6 wk and was almost universally present at 1 yr. Nodules of dysplastic cells demonstrating aneuploidy were seen as early as 10 wks. These became persistent, proliferative lesions. Dysplasia and aneuploidy distinctly increased with time and advancing microscopic stage as lesions progressed to malignancy. Tumors were seen after 1 yr as adenomas, which are aneuploid and most likely well‐differentiated hepatocellular carcinoma, and borderline malignant lesions; and, in 82 of Z#2 mice 16 to 20 mo old, as invasive hepatocellular carcinoma. These observations suggest but do not conclusively prove that hepatocellular carcinoma in α₁‐antitrypsin deficiency and other hepatic disorders arises as a result of a common, endogenously stimulated pathway for hepatocellular carcinogenesis. (Hepatology 1994;19:389–397).