Accumulation of epigenetic alterations causes inactivation of tumor suppressors and contributes to the initiation and progression of hepatocellular carcinoma (HCC). Identification of methylated genes is necessary to improve our understanding of the pathogenesis of HCC and develop novel biomarkers and therapeutic targets. The Kallmann syndrome-1 (KAL1) gene encodes an extracellular matrix-related protein with diverse oncological functions. However, the function of KAL1 in HCC has not been examined. We investigated the methylation status of the KAL1 promoter region in HCC cell lines, and evaluated KAL1 mRNA levels and those of genes encoding potential interacting cell adhesion factors. KAL1 mRNA expression level was heterogeneous in nine HCC cell lines, and reactivation of KAL1 mRNA expression was observed in cells with promoter hypermethylation of KAL1 gene after demethylation. In addition, KAL1 mRNA levels inversely correlated with those of ezrin in all nine HCC cell lines. KAL1 expression levels in 144 pairs of surgically-resected tissues were determined and correlated to clinicopathological parameters. KAL1 mRNA level was independent of the background liver status, whereas HCC tissues showed significantly lower KAL1 mRNA levels than corresponding noncancerous liver tissues. Downregulation of KAL1 mRNA in HCC was significantly associated with malignant phenotype characteristics, including elevated tumor markers, larger tumor size, vascular invasion, and hypermethylation of KAL1. Patients with downregulation of KAL1 were more likely to have a shorter overall survival than other patients, and multivariate analysis identified downregulation of KAL1 as an independent prognostic factor (hazard ratio 2.04, 95% confidence interval 1.11-3.90, P=0.022). Our results indicated that KAL1 may act as a putative tumor suppressor in HCC and is inactivated by promoter hypermethylation. KAL1 may serve as a biomarker of malignant phenotype of HCC.