Chronic infection with hepatitis B virus (HBV) can cause liver cancer in humans. Transgenic mice expressing the major envelope protein of HBV, HBV surface antigen (HBsAg), represent an experimental model for some of the histopathological effects of infection in humans, including prolonged hepatocellular injury, necrosis, hyperplasia, and an elevated incidence of liver tumors. The regenerative hyperplastic response to the chronic liver damage is thought to be a critical factor in the increased risk of cancer. However, little is known about the cellular factors that mediate regenerative proliferation. One candidate is the hepatocyte mitogen transforming growth factor alpha (TGF-alpha); in HBV-infected patients with liver cancer, TGF-alpha and HBsAg accumulate in the same hepatocytes. Transgenic mice overexpressing TGF-alpha demonstrate enhanced hepatocyte proliferation rates and develop hepatocellular carcinomas. In this study, we have analyzed the effect of TGF-alpha and HBsAg coexpression in the liver using a bitransgenic mouse model. We show that hepatocytes harboring both the TGF-alpha and HBsAg transgenes exhibited an increase in growth relative to hepatocytes with either transgene alone. Furthermore, bitransgenic males but not females had a dramatically accelerated appearance of hepatocellular carcinomas, compared to single transgenic TGF-alpha or HBsAg littermates. These results demonstrate synergistic activity between HBsAg and TGF-alpha in the liver, probably by first stimulating quiescent hepatocytes to enter G1 and by subsequently promoting their transit through the cell cycle, respectively. Moreover, our data support the contention that TGF-alpha participates in HBV-induced hepatocarcinogenesis in infected patients.