Human hepatocellular carcinoma (HCC) often arises from a background of liver cirrhosis. Therefore, in order to develop therapeutic strategies for HCC, an animal model bearing multifocal liver tumors accompanied by liver cirrhosis is a preferred experimental setting. In this study, we developed a rapid and reproducible method for generating such a model in rats by weekly administration of diethylnitrosamine (DEN) at doses based on body weight (BW). By adjusting the duration of administration of DEN, the animals could be induced to develop HCC alone, or HCC and liver cirrhosis simultaneously. The latter model was used for evaluating the therapeutic effects of adenoviral delivery of interferon-alpha (IFN-alpha). Our results demonstrated that targeting of IFN-alpha expression to the liver significantly reduced liver tumor volume and ameliorated liver cirrhosis. Mechanistic studies revealed that IFN-alpha gene therapy induced immunomodulatory, antiproliferative, and proapoptotic activities that were effective in the control of tumor growth, and reduced the expressions of transforming growth factor-beta (TGF-beta) and tissue inhibitor of metalloproteinase-1 (TIMP-1), leading to amelioration of liver cirrhosis. These results suggest that IFN-alpha gene therapy is a promising strategy to treat HCC patients who have concomitant liver cirrhosis.