Suppressor of cytokine signaling 3 (SOCS3) down-regulates several signaling pathways in multiple cell types, and previous data suggest that SOCS3 may shut off cytokine activation at the early stages of liver regeneration (Campbell, J.S., L. Prichard, F. Schaper, J. Schmitz, A. Stephenson-Famy, M.E. Rosenfeld, G.M. Argast, P.C. Heinrich, and N. Fausto. 2001.J. Clin. Invest. 107:1285-1292). We developed Socs3 hepatocyte-specific knockout (Socs3 h-KO) mice to directly study the role of SOCS3 during liver regeneration after a two-thirds partial hepatectomy (PH). Socs3 h-KO mice demonstrate marked enhancement of DNA replication and liver weight restoration after PH in comparison with littermate controls. Without SOCS3, signal transducer and activator of transcription 3 (STAT3) phosphorylation is prolonged, and activation of the mitogenic extracellular signal-regulated kinase 1/2 (ERK1/2) is enhanced after PH. In vitro, we show that SOCS3 deficiency enhances hepatocyte proliferation in association with enhanced STAT3 and ERK activation after epidermal growth factor or interleukin 6 stimulation. Microarray analyses show that SOCS3 modulates a distinct set of genes, which fall into diverse physiological categories, after PH. Using a model of chemical-induced carcinogenesis, we found that Socs3 h-KO mice develop hepatocellular carcinoma at an accelerated rate. By acting on cytokines and multiple proliferative pathways, SOCS3 modulates both physiological and neoplastic proliferative processes in the liver and may act as a tumor suppressor.