Growth arrest DNA damage-inducible gene 45 beta (GADD45beta) has been known to regulate cell growth, apoptotic cell death, and cellular response to DNA damage. Down-regulation of GADD45beta has been verified to be specific in hepatocellular cancer (HCC) and consistent with the p53 mutant, and degree of malignancy of HCC. This observation was further confirmed by eight HCC cell lines and paired human normal and HCC tumor tissues by Northern blot and immunohistochemistry. To better understand the transcription regulation, we cloned and characterized the active promoter region of GADD45beta in luciferase-expressing vector. Using the luciferase assay, three nuclear factor-kappaB binding sites, one E2F-1 binding site, and one putative inhibition region were identified in the proximal promoter of GADD45beta from -865/+6. Of interest, no marked putative binding sites could be identified in the inhibition region between -520/-470, which corresponds to CpG-rich region. The demethylating agent 5-Aza-dC was used and demonstrated restoration of the GADD45beta expression in HepG2 in a dose-dependent manner. The methylation status in the promoter was further examined in one normal liver cell, eight HCC cell lines, eight HCC tissues, and five corresponding nonneoplastic liver tissues. Methylation-specific polymerase chain reaction and sequencing of the sodium bisulfite-treated DNA from HCC cell lines and HCC samples revealed a high percentage of hypermethylation of the CpG islands. Comparatively, the five nonneoplastic correspondent liver tissues demonstrated very low levels of methylation. To further understand the functional role of GADD45beta under-expression in HCC the GADD45beta cDNA constructed plasmid was transfected into HepG2 (p53 WT) and Hep3B (p53 null) cells. The transforming growth factor-beta was assayed by enzyme-linked immunosorbent assay, which revealed a decrease to 40% in transfectant of HepG2, but no significant change in Hep3B transfectant. Whereas, Hep3B co-transfected with p53 and GADD45beta demonstrated significantly reduced transforming growth factor-beta. The colony formation was further examined and revealed a decrease in HepG2-GADD45beta transfectant and Hep3B-p53/GADD45beta co-transfectant. These findings suggested that methylation might play a crucial role in the epigenetic regulation of GADD45beta in hepatocyte transformation that may be directed by p53 status. Thus, our results provided a deeper understanding of the molecular mechanism of GADD45beta down-regulation in HCC.