Knockout studies have shown that the transcription factor Nrf1 is essential for embryonic development. Nrf1 has been implicated to play a role in mediating activation of oxidative stress response genes through the antioxidant response element (ARE). Because of embryonic lethality in knockout mice, analysis of this function in the adult knockout mouse was not possible. We report here that mice with somatic inactivation of nrf1 in the liver developed hepatic cancer. Before cancer development, mutant livers exhibited steatosis, apoptosis, necrosis, inflammation, and fibrosis. In addition, hepatocytes lacking Nrf1 showed oxidative stress, and gene expression analysis showed decreased expression of various ARE-containing genes, and up-regulation of CYP4A genes. These results suggest that reactive oxygen species generated from CYP4A-mediated fatty acid oxidation work synergistically with diminished expression of ARE-responsive genes to cause oxidative stress in mutant hepatocytes. Thus, Nrf1 has a protective function against oxidative stress and, potentially, a function in lipid homeostasis in the liver. Because the phenotype is similar to nonalcoholic steatohepatitis, these animals may prove useful as a model for investigating molecular mechanisms of nonalcoholic steatohepatitis and liver cancer.