Glycine N-methyltransferase (GNMT), a multifunctional protein involved in the maintenance of the genetic stability, is often down-regulated in hepatocellular carcinoma (HCC). Using genotypic characterization of GNMT in hepatoma cell lines and in a Taiwanese population with a high incidence of liver cancer we have investigated the role of this gene in the progression of liver cancer. Six novel polymorphisms, including two short tandem repeats, one 4-nucleotide insertion/deletion polymorphism, and three single nucleotide polymorphisms, in GNMT were identified in this study. The rates of loss of heterozygosity at the GNMT locus in pairs of normal and tumor tissue from the HCC patients were approximately 36-47%. In addition, the observed heterozygosity of GNMT decreases in tumor adjacent liver DNA from HCC patients compared with that observed in blood DNA from normal individuals and HCC patients. This may result from the early event of loss of heterozygosity within the GNMT gene in the liver tissues of HCC patients. However, in this study, we did not observe the association of polymorphic GNMT alleles as inherited risk factors for HCC. We also elucidated the functional impact of genetic markers in the GNMT promoter by performing luciferase reporter gene and gel mobility shift assays. The results indicate that two polymorphisms, short tandem repeat 1 and insertion/deletion polymorphism, in the promoter region could cause allelic specific effects on the transcriptional activity of GNMT. The risk genotypes of GNMT, which presumably have a lower expression level, as estimated from in vitro functional studies, are over-represented in tumor-adjacent tissues from HCC patients. In summary, our results suggest that GNMT alteration may be an early event in HCC development and that GNMT could be a new tumor susceptibility gene for HCC.