Persistent inflammation in chronic hepatitis plays a major role in the development of hepatocellular carcinoma (HCC). In this study, the major inflammatory cytokines expressed in chronic hepatitis, IL-6 and TNF-alpha, induced a marked decrease in microRNA-122 (miR-122) levels, and miR-122 expression was downregulated in the livers of chronic hepatitis B (CHB) patients. The decrease of miR-122 caused upregulation of the proinflammatory chemokine CCL2. IL-6 and TNF-alpha suppressed miR-122 both by directly downregulating the transcription factor C/EBPalpha and indirectly upregulating c-myc, which blocks C/EBPalpha-mediated miR-122 transcription. In addition, IL-6 and TNF-alpha levels were elevated and miR-122 levels were decreased in mouse and rat models of diethylnitrosamine (DEN)-induced HCC. Restoration of miR-122 levels through delivery of agomir-122 suppressed DEN-induced hepatocarcinogenesis in mice. Our results show that inflammation-induced miR-122 downregulation in hepatitis contributes to carcinogenesis and suggest that increasing miR-122 may be an effective strategy for preventing HCC development in CHB patients.