We previously reported a profound augmentation in the hepatic levels of a pro‐inflammatory precursor, arachidonic acid (
AA
), during liver tumorigenesis. Here, we report a critical role of the induced reactive oxygen species (
ROS
)‐mediated cellular activation of a protein cross‐linking enzyme, transglutaminase 2 (
TG
2), in liver injury by
AA
. In cultures of hepatic cells,
AA
dose‐dependently suppressed cell growth, which accompanied the induced nuclear accumulation of
TG
2, as demonstrated in
EGFP
‐tagged,
TG
2‐overexpressing hepatic cells. A chemical inhibitor/sh
RNA
that acts against
TG
2 prevented
AA
‐mediated cell growth suppression. In addition,
AA
provoked significant production of
ROS
, and antioxidants blocked
AA
‐induced activation of nuclear
TG
2 and hepatic cell growth suppression. We propose that
AA
‐mediated oxidative stress and
TG
2 transamidase activity might contribute to chronic liver injury and inflammation and thereby serve as potential therapeutic targets for the chemoprevention of hepatocellular carcinoma.