Epidemiological studies show an increased risk of developing liver cancer among alcoholics. There is some agreement that ethanol itself is not carcinogenic, but it may enhance the tumorigenic process by inducing drug-metabolizing enzymes, suppression of the immune system tem or by affecting DNA repair enzymes, Precisely how ethanol predisposes or promotes the development of hepatoma is unknown, Hepatocarcinogenesis induced by a choline-deficient, ethionine supplemented (CDE) diet produces extensive alteration of the liver architecture with the emergence and rapid proliferation of oval cells. This study examines whether chronic alcohol consumption induces the proliferation of oval cells, Oval cells induced in rats maintained on a 5% ethanol liquid diet (ELD) for up to 24 months, or fed a CDE diet for up to 4 weeks, are compared using a panel of liver-specific markers. In CDE-treated rats, oval cells staining positively for alpha-fetoprotein (AFP), pi-class glutathione S-transferase (pi GST), and the embryonic form of pyruvate kinase (M(2)-PK) are observed after 1 week, Similar cells are seen in ELD-treated rats after 2 months, Their numbers increase with time, and incorporation of [H-3]thymidine confirms they are a dividing population, Acute damage induced by partial hepatectomy and CCl4 poisoning did not induce the appearance of oval cells. We conclude that chronic ethanol consumption induces oval cell proliferation, We suggest that, in addition to other proposed mechanisms, an alteration in cellular composition of the liver be considered as an explanation for the increased incidence of liver cancer among alcoholics.