Hepatocyte nuclear factors (HNF) play a critical role in development of the liver. Their roles during liver tumorigenesis and progression of hepatocellular carcinomas (HCC) are, however, poorly understood. To address the role of HNFs in tumor progression, we generated a new experimental model in which a highly differentiated slow‐growing transplantable mouse HCC (sgHCC) rapidly gives rise in vivo to a highly invasive fast‐growing dedifferentiated variant (fgHCC). This in vivo model has allowed us to investigate the fundamental mechanisms underlying HCC progression. A complete loss of cell polarity, a decrease in cell‐cell and cell‐extracellular matrix (ECM) adhesion, elevation of telomerase activity, and extinction of liver‐specific gene expression accompanies tumor progression. Moreover, cells isolated from fgHCCs acquired the ability to proliferate rapidly in culture. These alterations were coupled with a reduced expression of several liver transcription factors including HNF4, a factor essential for hepatocyte differentiation. Forced re‐expression of HNF4α1 in cultured fgHCC cells reversed the progressive phenotype and induced fgHCC cells to re‐establish an epithelium and reform cell‐ECM contacts. Moreover, fgHCC cells that expressed HNF4α1 also re‐established expression of the profile of liver transcription factors and hepatic genes that are associated with a differentiated hepatocyte phenotype. Importantly, re‐expression of HNF4α1 in fgHCC reduced the proliferation rate in vitro and diminished tumor formation in congenic recipient mice. In conclusion, loss of HNF4 expression is an important determinant of HCC progression. Forced expression of this factor can promote reversion of tumors toward a less invasive highly differentiated slow‐growing phenotype. (HEPATOLOGY 2004;39;1038–1047.)