Dysplastic hepatocytes (DH) represent altered hepatocytes with potential for malignant transformation. To date, most research on pathways to hepatocarcinogenesis has focused on use of “hepatoma” cell lines derived from hepatocellular carcinoma (HCC). We describe a novel technique for deriving/culturing DH and demonstrate their utility for functional studies in vitro, compared to primary hepatocytes (PH) and HCC. PH and DH were prepared by portal vein collagenase perfusion from C57BL/6J mice. DH were subsequently subjected to FACS. HCC from diethylnitrosamine (DEN)-injected mice were mechanically isolated. Cell cycle analyses were performed by flow cytometry and PCNA immunohistochemistry. To establish utility of DH, we studied pathways of p53 turnover, apoptosis and cell proliferation using pfithrin-α (PFT) and nutlin-3. Like PH, DH were minimally proliferative compared to HCC. Only 30±0.03% of DH were in G2/M phase versus 51±0.01% of HCC; this difference corroborated with PCNA-immunostaining of dysplastic nodules from DEN-injected mice. In DH and HCC, nutlin-3 suppressed p53 mRNA, induced p53 and mdm2 activation but paradoxically resulted in increased anti-apoptotic and proliferative activity. Primary murine DH display distinctive biological characteristics compared with PH and HCC. As an intermediate cell type to HCC, they offer a new pathobiologically relevant primary cell culture system with which to interrogate the molecular changes in hepatocarcinogenesis.