Telomere maintenance and telomerase reactivation are near universal features of human hepatocellular carcinoma (HCC), yet the shorter telomeres and highly abnormal cytogenetic profiles of HCC suggest that telomere erosion and dysfunction may be operative during the formative stages of tumorigenesis. Previous studies have established that the cancer-enhancing or suppressing impact of telomere dysfunction is highly dependent on several parameters including cell type, tumor stage, and p53 status. Here, to understand better the pathogenetic role of telomere dysfunction in the initiation and progression in human HCC, we have used three mechanistically distinct liver cancer-prone model systems (urokinase plasminogen activator transgenic mice, carbon tetrachloride exposure, and diethylnistrosamine treatment) in the context of successive generations of telomerase-deficient mice null for the telomerase RNA component, mTERC. Across all of the HCC model systems, telomere dysfunction suppressed both the incidence and growth of HCC lesions, a trend that mirrored the level of intratumoral proliferative arrest and apoptosis. On the histological level, telomere dysfunction was associated with a significant increase in the number of early stage neoplastic lesions and a reciprocal decline in the occurrence of high-grade malignancies. These genetic data in the mouse indicate that telomere dysfunction exerts an opposing role in the initiation versus progression of HCC and provide a framework for understanding the intimate link among chronic liver disease, chromosomal instability, and increased HCC in humans.