TGF-β–activated kinase 1 (TAK1) is a MAP3K family member that activates NF-κB and JNK via Toll-like receptors and the receptors for IL-1, TNF-α, and TGF-β. Because the TAK1 downstream molecules NF-κB and JNK have opposite effects on cell death and carcinogenesis, the role of TAK1 in the liver is unpredictable. To address this issue, we generated hepatocyte-specific Tak1-deficient (Tak1ΔHEP) mice. The Tak1ΔHEP mice displayed spontaneous hepatocyte death, compensatory proliferation, inflammatory cell infiltration, and perisinusoidal fibrosis at age 1 month. Older Tak1ΔHEP mice developed multiple cancer nodules characterized by increased expression of fetal liver genes including α-fetoprotein. Cultures of primary hepatocytes deficient in Tak1 exhibited spontaneous cell death that was further increased in response to TNF-α. TNF-α increased caspase-3 activity but activated neither NF-κB nor JNK in Tak1-deficient hepatocytes. Genetic abrogation of TNF receptor type I (TNFRI) in Tak1ΔHEP mice reduced liver damage, inflammation, and fibrosis compared with unmodified Tak1ΔHEP mice. In conclusion, hepatocyte-specific deletion of TAK1 in mice resulted in spontaneous hepatocyte death, inflammation, fibrosis, and carcinogenesis that was partially mediated by TNFR signaling, indicating that TAK1 is an essential component for cellular homeostasis in the liver.