Loss of miR-122 causes chronic steatohepatitis and spontaneous hepatocellular carcinoma. However, the consequence of miR-122 deficiency on genotoxic stress-induced liver pathogenesis has not been explored. Here, we investigated the impact of miR-122 depletion on liver pathobiology by treating liver-specific miR-122 knockout (LKO) mice with the hepatocarcinogen diethylnitrosamine (DEN). At 25 weeks post-DEN injection, all LKO mice developed CK-19-positive hepatobiliary cysts, which correlated with DEN-induced transcriptional activation of Cdc25a mediated through E2f1. Additionally, LKO livers were more fibrotic and vascular, and developed larger microscopic tumors, possibly due to elevation of the Axl oncogene, a receptor tyrosine kinase as a novel target of miR-122, and several protumorigenic miR-122 targets. At 35 weeks following DEN exposure, LKO mice exhibited a higher incidence of macroscopic liver tumors (71%) and cysts (86%) compared to a 21.4% and 0% incidence of tumors and cysts, respectively, in control mice. The tumors in LKO mice were bigger (ninefold, P = 0.015) and predominantly hepatocellular carcinoma, whereas control mice mostly developed hepatocellular adenoma. DEN treatment also reduced survival of LKO mice compared to control mice (P = 0.03). Interestingly, induction of oxidative stress and proinflammatory cytokines in LKO liver shortly after DEN exposure indicates predisposition of a pro-tumorigenic microenvironment. Collectively, miR-122 depletion facilitates cystogenesis and hepatocarcinogenesis in mice on challenge with DEN by up-regulating several genes involved in proliferation, growth factor signaling, neovascularization, and metastasis.