The inactivation of the cyclin-dependent kinase 4 and 6 (CDK4/6) inhibitor p16INK4A may be caused by gene deletion, mutation or promoter hypermethylation. We have previously reported that p16INK4A in hepatocellular carcinoma (HCC) tissues and cell lines is inactivated predominantly by promoter hypermethylation rather than genomic aberrations. In the present experiments, we have studied the effects of the demethylating agent, 5-aza-2'-deoxycytidine (5-AZA/decitabine), on the expression of aberrant p16INK4A RNA transcripts and the CDK-retinoblastoma gene pathway in HCC cell lines with p16INK4A promoter hypermethylation. The expression of aberrant p16INK4A RNA transcripts was down-regulated and p16INK4A protein was strongly re-expressed in the HCC cell lines, SNU 354, 398, 423 and 475 after 5-AZA/decitabine treatment for 5 days. The re-expressed p16INK4A was functional, because it bound to and inhibited CDK4 kinase activity, and increased the concentrations of the hypophosphorylated form of retinoblastoma protein (pRB) in cells with a wild type RB gene. Moreover, treatment with the demethylating agent led not only to G1 cell cycle arrest, but also to the increased expression of the senescence-associated marker beta-galactosidase. This up-regulation of p16INK4A mRNA and protein correlated with demethylation of the p16INK4A promoter, and with the down-regulation or disappearance of aberrant p16INK4A transcripts. These results suggest that the aberrant p16INK4A RNA transcript can be transcribed from the methylated p16INK4A gene, and endogenous reactivation of functional p16INK4A mRNA by a demethylating agent can restore the pRB pathway in HCC, and foster the terminal differentiation of the malignant cells. Therefore, demethylating agents, such as 5-AZA/decitabine, may have potential in the treatment of HCC.