Selectively replicating recombinant adenovirus has emerged as a novel strategy for the treatment of incurable human cancers. One of the major characteristics of hepatocellular carcinoma is the transcriptional reactivation of alpha-fetoprotein (AFP). In this study, we evaluated the liver cancer-specific oncolytic potential of E1B 55kDa-deleted recombinant adenovirus (YKL-1001), which retained other E1 genes driven by the AFP promoter. Transient transfection study using luciferase indicated the selective activation of the AFP promoter only in human liver cancer cells secreting AFP (HepG2, Hep3B). YKL-1001 induced both cytopathic effects exclusively in AFP-positive liver cancer cells and the growth inhibition of pre-established Hep3B xenografts. Finally, hematoxylin-eosin staining and the immunohistochemistry to the adenoviral hexon showed a large distributed necrotic area and this implied a wide spread of YKL-1001. Therefore, the present study demonstrated that YKL-1001 holds significant promise as an oncolytic agent for hepatocellular carcinoma.