Transgenic mice that overexpress cyclin D1 protein in the liver develop liver carcinomas with high penetrance. Transforming growth factor beta (TGF-beta) serves as either an epithelial cell growth inhibitor or a tumor promoter, depending on the cellular context. We interbred LFABP-cyclin D1 and Alb-TGF-beta1 transgenic mice to produce cyclin D1/TGF-beta1 double transgenic mice and followed the development of liver tumors over time, characterizing cellular and molecular changes, tumor incidence, tumor burden, and tumor physiology noninvasively by magnetic resonance imaging. Compared with age-matched LFABP-cyclin D1 single transgenic littermates, cyclin D1/TGF-beta1 mice exhibited a significant increase in tumor incidence. Tumor multiplicity, tumor burden, and tumor heterogeneity were higher in cyclin D1/TGF-beta1 mice compared with single transgenic littermates. Characteristics of cyclin D1/TGF-beta1 livers correlated with a marked induction of the peripheral periductal oval cell/stem cell compartment of the liver. A number of cancerous lesions from cyclin D1/TGF-beta1 mice exhibited unique features such as ductal plate malformations and hemorrhagic nodules. Some lesions were contiguous with the severely diseased background liver and, in some cases, replaced the normal architecture of the entire organ. Cyclin D1/TGF-beta1 lesions, in particular, were associated with malignant features such as areas of vascular invasion by hepatocytes and heterogeneous hyperintensity of signal on T2-weighted magnetic resonance imaging. These findings demonstrate that TGF-beta1 promotes stem cell activation and tumor progression in the context of cyclin D1 overexpression in the liver.