Hepatocellular carcinoma (HCC) is a major health concern, and early HCC diagnosis is a primary radiological concern. The goal of imaging liver cirrhosis is the early identification of high-grade dysplastic nodules/early HCC since their treatment is associated with a higher chance of radical cure and lower recurrence rates. The newly introduced MRI contrast agent gadoxetic acid (gadolinium-ethoxybenzyl-diethylenetriamine pentaacetic acid, Gd-EOB-DTPA) has enabled the concurrent assessment of tumor vascularity and hepatocyte-specific contrast enhancement during the hepatobiliary phase (HBP), which can help to detect and characterize smaller HCCs and their precursors. HBP-EOB-MRI identifies hypovascular HCC nodules that are difficult to detect using ultrasonography or computed tomography, which do not show the diagnostic HCC hallmarks of arterial washin and portal/delayed washout. During the HBP, typical HCC and early HCC appear hypointense on EOB-MRI, whereas low-grade dysplastic or regenerative nodules appear as iso- or hyperintense lesions. The diagnostic accuracy of EOB-MRI for the diagnosis of early HCC is approximately 95-100%. One third of hypovascular hypointense nodules in HBP become hypervascular 'progressed' HCC, with a 1- and 3-year cumulative incidence of 25 and 41%, respectively. Therefore, these hypovascular nodules should be strictly followed up or definitely treated as typical HCC. Due to this capability of identifying the precursors and biological behavior of HCC, EOB-MRI has rapidly become a key imaging tool for the diagnosis of HCC and its precursors, despite the scarce MRI availability throughout Europe. With increasing experience, EOB-MRI may eventually be established as the diagnostic imaging modality of choice in this setting. Full recognition by the Western EASL-AASLD guidelines is expected.