Wilson disease is a severe genetic disorder associated with intracellular copper overload. The affected gene, ATP7B, has been identified, but the molecular events leading to Wilson disease remain poorly understood. Here, we demonstrate that genetically engineered Atp7b^−/− mice represent a valuable model for dissecting the disease mechanisms. These mice, like Wilson disease patients, have intracellular copper accumulation, low-serum oxidase activity, and increased copper excretion in urine. Their liver pathology developed in stages and was determined by the time of exposure to elevated copper rather than copper concentration per se. The disease progressed from mild necrosis and inflammation to extreme hepatocellular injury, nodular regeneration, and bile duct proliferation. Remarkably, all animals older than 9 months showed regeneration of large portions of the liver accompanied by the localized occurrence of cholangiocarcinoma arising from the proliferating bile ducts. The biochemical characterization of Atp7b^−/− livers revealed copper accumulation in several cell compartments, particularly in the cytosol and nuclei. The increase in nuclear copper is accompanied by marked enlargement of the nuclei and enhanced DNA synthesis, with these changes occurring before pathology development. Our results suggest that the early effects of copper on cell genetic material contribute significantly to pathology associated with Atp7b inactivation.