This study evaluated the significance of circulating bone marrow‐derived endothelial progenitor cells (EPCs) in patients with hepatocellular carcinoma (HCC), a solid tumor with rich neovasculature. Eighty patients with HCC were recruited for the study, and 16 patients with liver cirrhosis and 14 healthy subjects were also included for comparison. Blood samples were taken before treatment. Total mononuclear cells were isolated from peripheral blood, preplated to eliminate mature circulating endothelial cells, and colony‐forming units (CFUs) formed by circulating EPCs were counted. To validate the CFU scores, FACS quantification of EPCs using CD133, VEGFR2, and CD34 as markers was performed in 30 cases. Our study showed significantly higher mean CFU scores in patients with HCC compared to patients with cirrhosis and healthy controls (P = .001 and .009, respectively). Furthermore, the CFU scores of patients with HCC positively correlated with levels of serum α‐fetoprotein (r = .303, P = .017), plasma VEGF (r = .242, P = .035), and plasma interleukin‐8 (IL‐8) (r = .258, P = .025). Patients with unresectable HCC had higher CFU scores than patients with resectable tumors (P = .027). Furthermore, for those who underwent curative surgery, higher preoperative CFU scores were observed in patients with recurrence within 1 year compared with those who were disease‐free after 1 year (P = .013). In conclusion, higher circulating levels of EPCs are seen in patients with advanced unresectable HCC as compared to patients with resectable HCC or those with liver cirrhosis. Our evidence supports the potential use of circulating level of EPCs as a prognostic marker in patients with HCC. (HEPATOLOGY 2006;44:836–843.)