The IkappaB kinase (IKK) subunit NEMO/IKKgamma is essential for activation of the transcription factor NF-kappaB, which regulates cellular responses to inflammation. The function of NEMO in the adult liver remains elusive. Here we show that ablation of NEMO in liver parenchymal cells caused the spontaneous development of hepatocellular carcinoma in mice. Tumor development was preceded by chronic liver disease resembling human nonalcoholic steatohepatitis (NASH). Antioxidant treatment and genetic ablation of FADD demonstrated that death receptor-mediated and oxidative stress-dependent death of NEMO-deficient hepatocytes triggered disease pathogenesis in this model. These results reveal that NEMO-mediated NF-kappaB activation in hepatocytes has an essential physiological function to prevent the spontaneous development of steatohepatitis and hepatocellular carcinoma, identifying NEMO as a tumor suppressor in the liver.