Clinical efficacy of current therapies for hepatocellular carcinoma (HCC) treatment is limited. Indole-3-acetic acid (IAA) is non-toxic for mammalian cells. Oxidative decarboxylation of IAA by horseradish peroxidase (HRP) leads to toxic effects of IAA. The purpose of this study was to investigate the effects of a novel gene-targeted enzyme prodrug therapy with IAA on hepatoma growth in vitro and in vivo mouse hepatoma models. We generated a plasmid using adenovirus to express HRP isoenzyme C (HRPC) with the HCC marker, alpha-fetoprotein (AFP), as the promoter (pAdv-AFP-HRPC). Hepatocellular cells were infected with pAdv-AFP-HRPC and treated with IAA. Cell death was detected using MTT assay. Hepatoma xenografts were developed in mice by injection of mouse hepatoma cells. The size and weight of tumors and organs were evaluated. Cell death in tumors was assessed using hematoxylin and eosin-stained tissue sections. HRPC expression in tissues was detected using Reverse Transcriptase-Polymerase Chain Reaction. IAA stimulated death of hepatocellular cells infected with pAdv-AFP-HRPC, in a dose- and time-dependent manner, but not in control cells. Growth of hepatoma xenografts, including the size and weight, was inhibited in mice treated with pAdv-AFP-HRPC and IAA, compared with that in control group. pAdv-AFP-HRPC/IAA treatment induced cell death in hepatoma xenografts in mice. HRPC gene expressed only in hepatoma, but not in other normal organs of mice. pAdv-AFP-HRPC/IAA treatment did not cause any side effects on normal organs. These findings suggest that pAdv-AFP-HRPC/IAA enzyme/prodrug system may serve as a strategy for HCC therapy.