Liver adenomas are benign tumors at risk of malignant transformation. In a genome-wide search for loss of heterozygosity (LOH) associated with liver adenomas, we found a deletion in chromosome 12q in five of ten adenomas. In most cases, LOH at 12q was the only recurrent genetic alteration observed, suggesting the presence of a tumor-suppressor gene in that region. A minimal common region of deletion was defined in 12q24 that included the gene TCF1 (transcription factor 1), encoding hepatocyte nuclear factor 1 (HNF1; refs 1,2). Heterozygous germline mutations of TCF1 have been identified in individuals affected with maturity-onset diabetes of the young type 3 (MODY3; ref. 3). Bi-allelic inactivation of TCF1 was found in 10 of 16 screened adenomas, and heterozygous germline mutation were present in three affected individuals. Furthermore, 2 well-differentiated hepatocellular carcinomas (HCCs) occurring in normal liver contained somatic bi-allelic mutations of 30 screened HCCs. These results indicate that inactivation of TCF1, whether sporadic or associated with MODY3, is an important genetic event in the occurrence of human liver adenoma, and may be an early step in the development of some HCCs.