The glycosyltransferase termed GlcNAc-TIII is dedicated to the transfer of a single N-acetylglucosamine (GlcNAc) residue (the bisecting GlcNAc), to a subset of N-glycans in glycoproteins. The addition of this GlcNAc is differentially regulated during development and is induced in certain cancers, particularly in hepatic tumorigenesis. To investigate a functional role for the bisecting GlcNAc in the development of liver cancer, the Mgat3 gene that codes for GlcNAc-TIII, was inactivated by targeted gene disruption, and the susceptibility of Mgat3-/- mice to tumor induction was tested. After a single injection with diethylnitrosamine and subsequent treatment with phenobarbitol for 6 months, Mgat3+/+ and Mgat3+/- mice had grossly enlarged livers that contained numerous tumors. By stark contrast, Mgat3-/- mice had livers of normal size, and only 50% of mice had one to four small tumors. However, histological examination showed that Mgat3-/- livers had significant numbers of basophilic foci, and by 10-12 months after diethylnitrosamine injection, tumors had developed in Mgat3-/- mice. Therefore, initiation occurred in Mgat3-/- mice but progression was severely retarded. Assays for Mgat3 gene expression in tumor tissue gave an unexpected result. In contrast to the situation in the rat, hepatic tumor formation in the mouse was not accompanied by a dramatic increase of GlcNAc-TIII activity nor of glycoproteins with a bisecting GlcNAc, nor of Mgat3 gene expression in tumor tissue from wild-type mice. The data suggest that a glycoprotein factor with the bisecting GlcNAc facilitates tumor progression in liver. In the absence of the bisecting GlcNAc in Mgat3-/- mice, the factor is reduced in activity, and tumor progression is severely retarded.