Loss of retinoid-containing lipid droplets upon hepatic stellate cell (HSC) activation is one of the first events in the development of liver disease leading to hepatocellular carcinoma. Although retinoid stores are progressively lost from HSCs during the development of hepatic disease, how this affects hepatocarcinogenesis is unclear. To investigate this, we used diethylnitrosamine (DEN) to induce hepatic tumorigenesis in matched wild-type (WT) and lecithin:retinol acyltransferase (LRAT) knockout (KO) mice, which lack stored retinoid and HSC lipid droplets. Male 15-day-old WT or Lrat KO mice were given intraperitoneal injections of DEN (25 mg/kg body wt). Eight months later, Lrat KO mice showed significantly less liver tumor development compared with WT mice, characterized by less liver tumor incidence and smaller tumor size. Two days after DEN injection, lower serum levels of alanine aminotransferase and decreased hepatic levels of cyclin D1 were observed in Lrat KO mice. Lrat KO mice also exhibited increased levels of retinoic acid-responsive genes, including p21, lower levels of cytochrome P450 enzymes required for DEN bioactivation and higher levels of the DNA repair enzyme O⁶ -methylguanine-DNA methyltransferase (MGMT), both before and after DEN treatment. Our results indicate that Lrat KO mice are less susceptible to DEN-induced hepatocarcinogenesis due to increased retinoid signaling and higher expression of p21, which is accompanied by altered hepatic levels of DEN-activating enzymes and MGMT in Lrat KO mice also contribute to decreased cancer initiation and suppressed liver tumor development.