In this study we analyzed by immunohistochemistry the expression of TGF-beta1 protein and TGF-beta receptors I and II in 4 low-grade dysplastic nodules, 2 high-grade dysplastic nodules, 6 early, 22 small, and 62 advanced hepatocellular carcinomas. The expression of TGF-beta1 protein by hepatocytes was decreased in advanced hepatocellular carcinoma compared with small or early hepatocellular carcinoma(P < .05). Frequent and intense staining of TGF-beta1 protein was noted in the sinusoidal endothelium of advanced hepatocellular carcinomas despite of its decreased staining in hepatocellular carcinoma cells. Reduced expression of TGF-beta receptors I and II compared with surrounding nontumorous tissue were noted from the early hepatocellular carcinoma stage suggesting that down-regulation of TGF-beta receptors is correlated with progression from premalignant to malignant phenotype. Reduced expression of both TGF-beta1 and TGF-beta receptor II in neoplastic hepatocytes were also significantly correlated with increased tumor size and increased proliferative activity(P < .05). These findings suggest that during hepatocarcinogenesis, the inhibitory effects of TGF-beta1 protein on hepatocellular carcinoma cells is outweighed by its effects on stromal elements, which, overall, contributes indirectly to a tumor growth stimulatory environment. Also, the growth-inhibitory effects of TGF-beta1 may have been further negated by reduced TGF-beta receptors on hepatocellular carcinoma cells.