Nodular hepatic lesions detected in 123 patients with chronic liver diseases were subjected to ultrasonically guided needle biopsy. Of these, 94 cases were diagnosed as hepatocellular carcinoma of a moderately or poorly differentiated type with classical histologic features of hepatocellular carcinoma. In 14 cases in whom hepatocytes had minimal atypical changes and were mostly of normotrabecular arrangement (one to two cells thick), a diagnosis of well-differentiated hepatocellular carcinoma was made on the basis of the following three histologic criteria: nuclear crowding, increased cytoplasmic basophilia and microacinar formation. The nodules which showed two or more of these findings were diagnosed as well-differentiated HCC. The diagnoses of these 14 cases were subsequently confirmed by clinical course, histology in the resected specimen and/or autopsy findings. The nodules that presented similar but equivocal changes were arbitrarily categorized as borderline lesions (five cases). The nodules showing the findings almost identical with those of pseudolobules were regarded as benign, large regenerative nodules (nine cases). The remaining one case had a hemangioma. Thus, these three histologic criteria proved to be useful in the biopsy diagnosis of nodular hepatic lesions, with certain limitations. Additionally, the majority of large regenerative nodules, borderline lesions and well-differentiated HCCs were found to be smaller than 2 cm.