An important regulator of inflammatory signalling is the ubiquitin-editing protein A20 that acts as a break on nuclear factor-κB (NF-κB) activation, but also exerts important cytoprotective functions. A20 knockout mice are cachectic and die prematurely due to excessive multi-organ inflammation. To establish the importance of A20 in liver homeostasis and pathology, we developed a novel mouse line lacking A20 specifically in liver parenchymal cells. These mice spontaneously develop chronic liver inflammation but no fibrosis or hepatocellular carcinomas, illustrating an important role for A20 in normal liver tissue homeostasis. Hepatocyte-specific A20 knockout mice show sustained NF-κB-dependent gene expression in the liver upon tumor necrosis factor (TNF) or lipopolysaccharide injection, as well as hepatocyte apoptosis and lethality upon challenge with sublethal doses of TNF, demonstrating an essential role for A20 in the protection of mice against acute liver failure. Finally, chronic liver inflammation and enhanced hepatocyte apoptosis in hepatocyte-specific A20 knockout mice was associated with increased susceptibility to chemically or high fat-diet-induced hepatocellular carcinoma development. Together, these studies establish A20 as a crucial hepatoprotective factor.