Hepatocellular carcinoma (HCC) is one of the most common fatal cancers in the world. However, the underlying molecular mechanisms contributing to hepatocarcinogenesis are still unclear. A putative tumor suppressor gene, namely DLC-1 (frequently deleted in liver cancer) was identified and mapped at chromosome 8p21.3–22, a recurrently deleted region in human cancers. The gene exerts inhibitory effects on the cell proliferation of HCC cells. In this study, we investigated the biological function, and genetic and epigenetic status of this gene in human HCC. With in vitro GTPase activating proteins activity assay, we established that DLC-1 protein was a GTPase-activating protein specific for RhoA and Cdc42. Deletion of the DLC-1 gene was frequent in human HCC, as revealed by loss of heterozygosity analysis performed on 100 human HCC cases with markers mapped at the DLC-1 locus, and allelic losses ranging from 44% to 50% of the informative cases. However, somatic mutations of the DLC-1 gene were rare. Moreover, with real-time quantitative PCR, we found that DLC-1 mRNA was significantly underexpressed in HCCs when compared with the corresponding nontumorous livers (P < 0.0001). In addition, the CpG island 5′ to the DLC-1 gene was methylated in 3 of 7 HCC cell lines and in 6 (24%) of 25 primary HCCs. These data suggest that transcriptional silencing by hypermethylation may contribute to the inactivation of the DLC-1 gene. Taken together, the results of our study suggest that both genetic and epigenetic alterations play an important role in inactivation of the DLC-1 gene in hepatocarcinogenesis.