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Abstract Background The stromal antigen 3 (STAG3) gene encodes an adhesion complex subunit that can regulate sister chromatid cohesion during cell division. Chromosome instability caused by STAG3 gene mutation may potentially promote tumor progression, but the effect of STAG3 on hepatocellular carcinoma (HCC) and the related molecular mechanism are not reported in the literature. The mechanism of the occurrence and development of HCC is not adequately understood. Therefore, the biological role of STAG3 in HCC remains to be studied, and whether STAG3 might be a sensitive therapeutic target in HCC remains to be determined. Methods The expression and clinical significance of STAG3 in HCC tissues and cell lines were determined by RT–qPCR and immunohistochemistry analyses. The biological functions of STAG3 in HCC were determined through in vitro and in vivo cell function tests. The molecular mechanism of STAG3 in HCC cells was then investigated by western blot assay. Results The mRNA expression of STAG3 was lower in most HCC cells than in normal cells. Subsequently, an immunohistochemical analysis of STAG3 was performed with 126 samples, and lower STAG3 expression was associated with worse overall survival in HCC patients. Moreover, cytofunctional tests revealed that the lentivirus-mediated overexpression of STAG3 in HCC cells inhibited cell proliferation, migration, and invasion; promoted apoptosis; induced G1/S phase arrest in vitro; and inhibited tumor growth in vivo. Furthermore, studies of the molecular mechanism suggested that the overexpression of STAG3 increased Smad3 expression and decreased CDK4, CDK6, cyclin D1, CXCR4 and RhoA expression. Conclusion STAG3 exhibits anticancer effects against HCC, and these effects involve the Smad3-CDK4/CDK6-cyclin D1 and CXCR4/RhoA pathways. STAG3 is a tumor-suppressor gene that may serve as a potential target for molecular therapy, which provides a new idea for the treatment of HCC.