Hepatocellular carcinoma (HCC) results from the accumulation of deregulated tumor suppressor genes and/or oncogenes in hepatocytes. Inactivation of TP53 and inhibition of transforming growth factor‐beta (TGF‐β) signaling are among the most common molecular events in human liver cancers. Thus, we assessed whether inactivation of TGF‐β signaling, by deletion of the TGF‐β receptor, type II (Tgfbr2), cooperates with Trp53 loss to drive HCC formation. Albumin‐cre transgenic mice were crossed with floxed Trp53 and/or floxed Tgfbr2 mice to generate mice lacking p53 and/or Tgfbr2 in the liver. Deletion of Trp53 alone (Trp53^KO) resulted in liver tumors in approximately 41% of mice by 10 months of age, whereas inactivation of Tgfbr2 alone (Tgfbr2^KO) did not induce liver tumors. Surprisingly, deletion of Tgfbr2 in the setting of p53 loss (Trp53^KO;Tgfbr2^KO) decreased the frequency of mice with liver tumors to around 17% and delayed the age of tumor onset. Interestingly, Trp53^KO and Trp53^KO;Tgfbr2^KO mice develop both HCC and cholangiocarcinomas, suggesting that loss of p53, independent of TGF‐β, may affect liver tumor formation through effects on a common liver stem cell population. Assessment of potential mechanisms through which TGF‐β signaling may promote liver tumor formation in the setting of p53 loss revealed a subset of Trp53^KO tumors that express increased levels of alpha‐fetoprotein. Furthermore, tumors from Trp53^KO mice express increased TGF‐β1 levels compared with tumors from Trp53^KO;Tgfbr2^KO mice. Increased phosphorylated Smad3 and ERK1/2 expression was also detected in the tumors from Trp53^KO mice and correlated with increased expression of the TGF‐β responsive genes, Pai1 and Ctgf. Conclusion: TGF‐β signaling paradoxically promotes the formation of liver tumors that arise in the setting of p53 inactivation. (HEPATOLOGY 2012)