Previous studies have demonstrated in hepatocytes that deoxycholic acid (DCA) promotes inactivation of protein tyrosine phosphatases (PTPases) and activation of ERBB1 and the extracellular-regulated kinase (ERK) 1/2 pathway. The present studies have determined the biochemical mechanism(s) through which these events occur. DCA and taurodeoxycholic acid (TDCA) (100 μmol/L) caused activation of ERBB1, insulin receptor, and the ERK1/2 and AKT pathways in primary rodent hepatocytes. DCA- and TDCA-induced receptor and signaling pathway activations were blocked by the reactive oxygen species (ROS) scavengers N-acetyl cysteine (NAC) and Trolox (TX), as well as by cyclosporin A (CsA) and bongkrekic acid (BKA). DCA activated the ERK1/2 pathway in HuH7 human hepatoma cells that was blocked by the incubation of cells with an ERBB1 inhibitor, NAC, TX, CsA, or BKA. DCA did not activate the ERK1/2 pathway in mitochondria-defective HuH7 Rho 0 cells. In HuH7 cells and primary hepatocytes, DCA enhanced the production of ROS, an effect that was abolished in Rho 0 cells and by prior incubation of cells with CsA or BKA. In hepatocytes and HuH7 cells, DCA inhibited PTPase activity. Incubation of hepatocytes with either CsA or BKA prevented DCA-induced inhibition of PTPase activity. Loss of mitochondrial function in Rho 0 cells also abolished the inhibitory effects of DCA on PTPase activity. In conclusion, DCA and TDCA cause ROS generation in hepatocytes that is dependent on metabolically active mitochondria. The generation of ROS is essential for PTPase inactivation, receptor tyrosine kinase activation, and enhanced signaling down the ERK1/2 and AKT pathways. (Hepatology 2004;40:961–971).