Cystic degeneration /spongiosis hepatis in rats has been proposed to be a preneoplastic and/or neoplastic lesion by some authors, because of its proliferative properties and persistent increased cell turnover rate in stop experiments using hepatocarcinogens , and the assumption that it can develop into a sarcoma. The neoplastic potential of cystic degeneration is questioned in this review article. Cystic degeneration , which appears to derive from altered Ito cells, does not have neoplastic histomorphologi c characteristics, although it may be composed of cells with an increased mitotic index. In this regard, persistent proliferation is also seen with other nonneoplasti c lesions. Argument s are presented to show that the induced, probably extremely rare sarcoma that was associated with cystic degeneration most likely derives from the very rare induced spherical Ito-cell aggregate with an unusually high cellular turnover rate in rats treated with hepatocarcinogens , and not from cystic degeneration . Also, in none of 12 referenced standard oncogenicity studies with chemically induced cystic degeneration was the lesion associated with mesenchymal (Ito-cell) tumors. Consequently, evidence is lacking that cystic degeneratio n in rats should be classi ed as a preneoplastic or neoplastic lesion.The 12 oncogenicity studies in rats with induced cystic degeneratio n showed a marked sex predilection, with males more likely to develop either spontaneous or chemically induced lesions. In these 12 studies, cystic degeneration was more often associated with hepatocellular hypertrophy or hepatotoxicit y, rather than hepatocarcinogenicit y. Thus, it is concluded that hepatocarcinogen s induce cystic degeneration , not because they are carcinogenic , but because they have other effects on the liver, and that cystic degeneration may be a secondary /reparative change. Cystic degeneration in sh parallels the situation in rats in many respects, yet the existence of the lesion in other species, including man, is not as well supported. Based on the data presented in this review, spontaneous and induced cystic degeneratio n in rats and sh is not a preneoplasti c or neoplastic lesion and risk assessment for man can be based on no-effect levels and safety margins, as for other nonneoplasti c adverse effects that have no counterpart in man.