The aim of this study was to examine the significance of aberrant DNA methylation, the participation of which in genetic instability is controversial, in hepatocarcinogenesis. The DNA methylation status of the region around the promoter of the E-cadherin tumor suppressor gene, which is located on 16q22.1, and the allelic status at the D16S421 locus, which is adjacent to the E-cadherin locus, were examined using microdissected liver specimens from 38 hepatocellular carcinoma (HCC) patients. Almost all of the non-cancerous liver tissues showed histological findings compatible with chronic hepatitis and cirrhosis, which are considered to be precancerous conditions. DNA hypermethylation was detected in 61% of the non-cancerous liver tissues. The incidence of DNA hypermethylation in the non-cancerous liver tissues of patients with HCCs also showing DNA hypermethylation (72%) was significantly higher than that of patients without DNA hypermethylation in their HCCs (53%, P<0.05). Loss of heterozygosity (LOH) at the D16S421 locus was detected in 35% of the non-cancerous liver tissues. The incidence of LOH in the non-cancerous liver tissues of patients with HCCs also showing LOH was 78%, whereas LOH was not detected in non-cancerous liver tissues of patients without LOH in their HCCs. Fifty-two percent of the non-cancerous liver tissues showed both or neither of DNA hypermethylation and LOH; the incidence of DNA hypermethylation alone in noncancerous liver tissue was 41%. The incidence of LOH alone in non-cancerous liver tissue (7%) was significantly lower compared to those of the former two cases (P<0.0001). These data suggest that aberrant DNA methylation participates in the precancerous stage of hepatocarcinogenesis by preceding, or causing, LOH.