Human hepatocellular carcinomas (HCCs), which arise on a background of chronic liver damage and inflammation, express c-Fos, a component of the AP-1 transcription factor. Using mouse models, we show that hepatocyte-specific deletion of c-Fos protects against diethylnitrosamine (DEN)-induced HCCs, whereas liver-specific c-Fos expression leads to reversible premalignant hepatocyte transformation and enhanced DEN-carcinogenesis. c-Fos–expressing livers display necrotic foci, immune cell infiltration, and altered hepatocyte morphology. Furthermore, increased proliferation, dedifferentiation, activation of the DNA damage response, and gene signatures of aggressive HCCs are observed. Mechanistically, c-Fos decreases expression and activity of the nuclear receptor LXRα, leading to increased hepatic cholesterol and accumulation of toxic oxysterols and bile acids. The phenotypic consequences of c-Fos expression are partially ameliorated by the anti-inflammatory drug sulindac and largely prevented by statin treatment. An inverse correlation between c-FOS and the LXRα pathway was also observed in human HCC cell lines and datasets. These findings provide a novel link between chronic inflammation and metabolic pathways important in liver cancer.