Reactive oxygen species (ROS) resulting from chronic inflammation cause liver injury leading to transformation of regenerating hepatocytes. Metallothioneins (MT), induced at high levels by oxidative stress, are potent scavengers of ROS. Here, we report that the levels of MT-1 and MT-2A are drastically reduced in primary human hepatocellular carcinomas (HCCs) and in diethylnitrosamine-induced liver tumors in mice, which is primarily due to transcriptional repression. Expression of the transcription factor, MTF-1, essential for MT expression, and its target gene Zn-T1 that encodes the zinc transporter-1 was not significantly altered in HCCs. Inhibitors of both phosphatidylinositol 3-kinase (PI3K) and its downstream target AKT increased expression of MT genes in HCC cells but not in liver epithelial cells. Suppression of MT-1 and MT-2A by ectopic expression of the constitutively active PI3K or AKT and their up-regulation by dominant-negative PI3K or AKT mutant confirmed negative regulation of MT expression by PI3K/AKT signaling pathway. Further, treatment of cells with a specific inhibitor of glycogen synthase kinase-3 (GSK-3), a downstream effector of PI3K/AKT, inhibited MT expression specifically in HCC cells. Short interfering RNA-mediated depletion of CCAAT/enhancer binding protein alpha (C/EBPalpha), a target of GSK-3, impeded MT expression, which could not be reversed by PI3K inhibitors. DNA binding activity of C/EBPalpha and its phosphorylation at T222 and T226 by GSK-3 are required for MT expression. MTF-1 and C/EBPalpha act in concert to increase MT-2A expression, which probably explains the high level of MT expression in the liver. This study shows the role of PI3K/AKT signaling pathway and C/EBPalpha in regulation of MT expression in hepatocarcinogenesis.