Cux-1 is a member of a family of homeobox genes structurally related to Drosophila Cut. Mammalian Cut proteins function as transcriptional repressors of genes specifying terminal differentiation in multiple cell lineages. In addition, mammalian Cut proteins serve as cell-cycle-dependent transcriptional factors in proliferating cells, where they function to repress expression of the cyclin kinase inhibitors p21 and p27. Previously we showed that transgenic mice expressing Cux-1 under control of the CMV immediate early gene promoter develop multiorgan hyperplasia. Here we show that mice constitutively expressing Cux-1 exhibit hepatomegaly correlating with an increase in cell proliferation. In addition, the increase in Cux-1 expression in transgenic livers was associated with a decrease in p21, but not p27, expression. Within transgenic livers, Cux-1 was ectopically expressed in a population of small cells, but not in mature hepatocytes, and many of these small cells expressed markers of proliferation. Transgenic livers showed an increase in α-smooth muscle actin, indicating activation of hepatic stellate cells, and an increase in cells expressing chromogranin-A, a marker for hepatocyte precursor cells. Morphological analysis of transgenic livers revealed inflammation, hepatocyte swelling, mixed cell foci, and biliary cell hyperplasia. These results suggest that increased expression of Cux-1 may play a role in the activation of hepatic stem cells, possibly through the repression of the cyclin kinase inhibitor p21. © 2005 Wiley-Liss, Inc.