Hepatocellular carcinoma (HCC) is a major cause of cancer death, but the molecular mechanism for its development beyond its initiation has not been well characterized. Suppressor of cytokine signaling (SOCS-1; also known as JAB and SSI-1) switches cytokine signaling 'off' by means of its direct interaction with Janus kinase (JAK). We identified aberrant methylation in the CpG island of SOCS-1 that correlated with its transcription silencing in HCC cell lines. The incidence of aberrant methylation was 65% in the 26 human primary HCC tumor samples analyzed. Moreover, the restoration of SOCS-1 suppressed both growth rate and anchorage-independent growth of cells in which SOCS-1 was methylation-silenced and JAK2 was constitutively activated. This growth suppression was caused by apoptosis and was reproduced by AG490, a specific, chemical JAK2 inhibitor that reversed constitutive phosphorylation of STAT3 in SOCS-1 inactivated cells. The high prevalence of the aberrant SOCS-1 methylation and its growth suppression activity demonstrated the importance of the constitutive activation of the JAK/STAT pathway in the development of HCC. Our results also indicate therapeutic strategies for the treatment of HCC including use of SOCS-1 in gene therapy and inhibition of JAK2 by small molecules, such as AG490.