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The identification of cancer genes differentially expressed in hepatocellular carcinoma (HCC) plays an important role in understanding the molecular mechanisms of hepatocarcinogenesis. Here, ARHI gene expression was analyzed by real-time RT-PCR and it was significantly downregulated in 33 of the 42 (78.6%, more than two folds) HCC specimens compared with adjacent noncancerous livers (P < 0.01). In addition, ARHI expression was reduced in some HCC samples at protein level confirmed by immunohistochemistry. Furthermore, our data suggested that the overexpression of ARHI can significantly inhibit cell growth and colony formation of Hep3B cells (P < 0.01), whilst silencing endogenous ARHI gene by RNAi could promote cell growth of Huh-7 and Focus. LOH of microsatellite markers D1S2806 and D1S2803 was only found in 2.4% (1 of 42 HCCs) of HCC cases. The expression of ARHI was obviously re-expressed in some HCC cells, Bel-7402, Bel-7405, QGY-7703 and Hep3B, by a demethylation agent, 5-aza-2'-deoxycytidine (DAC). DNA hypermethylation within ARHI promoter was identified in 47.1% of HCC specimens without ARHI expression. Our current observations provide evidences that ARHI downregulated in HCCs could play a role in liver cancer via acting as a tumor suppressor gene, which mainly was triggered by the epigenetic events in HCC specimens.