Background & Aims: Recent advances in imaging modalities allow the identification of borderline hepatocellular nodules that have the potential for malignant transformation. The aim of this study was to elucidate histological predictive features of borderline nodules by needle biopsy for the evolution to hepatocellular carcinoma (HCC). Methods: Thirty-four hepatocellular nodules diagnosed by needle biopsy were followed up for more than 6 months. Several histological parameters of these nodules that were related to malignant transformation were evaluated. Results: During the follow-up periods (median, 35 months), 5 of 34 nodules evolved to HCC during a follow-up of 6–15 months. Significant prognostic features of malignant transformation were an increased ratio of nuclear density of >1.5, clear cell change, small cell dysplasia, and fatty change of the hepatocytes. In multivariate analysis, an increased ratio of nuclear density of >1.5 and clear cell change were independent. Conclusions: A nodule with an increased ratio of nuclear density, clear cell change, small cell dysplasia, and fatty change should be recognized to be a high risk for evolution to HCC. Particularly, the former two were independent prognostic factors for malignant transformation. GASTROENTEROLOGY 1998;115:1216-1222