Posttranslational modification of different proteins via direct ubiquitin attachment is vital for mediating various cellular processes. Cylindromatosis (CYLD), a deubiquitination enzyme, is able to cleave the polyubiquitin chains from the substrate and to regulate different signaling pathways. Loss, or reduced expression, of CYLD is observed in different types of human cancer, such as hepatocellular carcinoma (HCC). However, the molecular mechanism by which CYLD affects cancerogenesis has to date not been unveiled. The aim of the present study was to examine how CYLD regulates cellular functions and signaling pathways during hepatocancerogenesis. We found that mice lacking CYLD were highly susceptible to chemically induced liver cancer. The mechanism behind proved to be an elevated proliferation rate of hepatocytes, owing to sustained c-Jun N-terminal kinase 1 (JNK1)-mediated signaling via ubiquitination of TNF receptor-associated factor 2 and expression of c-MYC. Overexpression of wild-type CYLD in HCC cell lines prevented cell proliferation, without affecting apoptosis, adhesion and migration. A combined immunohistochemical and tissue microarray analysis of 81 human HCC tissues revealed that CYLD expression is negatively correlated with expression of proliferation markers Ki-67 and c-MYC. To conclude, we found that downregulation of CYLD induces tumor cell proliferation, consequently contributing to the aggressive growth of HCC. Our findings suggest that CYLD holds potential to serve as a marker for HCC progression, and its link to c-MYC via JNK1 may provide the foundation for new therapeutic strategies for HCC patients.