Precancerous lesions that may be detected in chronically diseased, usually cirrhotic livers, include: clusters of hepatocytes with atypia and increased proliferative rate (dysplastic foci) that usually represent an incidental finding in biopsy or resection specimens; and grossly evident lesions (dysplastic nodules) that may be detected on radiologic examination. There are two types of small hepatocellular carcinoma (HCC) (defined as HCC that measures less than 2 cm): early HCC, which is well-differentiated and has indistinct margins; and distinctly nodular small HCC, which is well- or moderately differentiated, and is usually surrounded by a fibrous capsule. Precise diagnosis of precancerous and early cancerous lesions by imaging methods is often difficult or impossible. Detection of a dysplastic lesion in a biopsy specimen is a marker of increased risk for HCC development, and warrants increased surveillance. High-grade dysplastic nodules and small HCCs should be treated by local ablation, surgical resection, or liver transplantation.