Natural killer (NK) cells are characterized by an efficient antitumor activity, and this activity has been exploited as the basis of cancer immunotherapy strategies. Interferon-α (IFN-α) is an important cytokine required for induction of the durable antitumor immune response and is an important stimulator of NK cells. In this study, to augment the efficiency of NK cell cytotoxicity to tumor cells, human IFN-α gene-modified natural killer cell line (NKL) (NKL-IFNα) cells, which could stably secrete IFN-α, were established. We investigated the natural cytotoxicity of NKL-IFNα cells against human hepatocarcinoma cells (HCCs) in vitro and in vivo. NKL-IFNα cells displayed a significantly stronger cytolytic activity against both human HCC cell lines and primary human hepatoma cancer cells compared with parental NKL cells. The increased cytolytic activity of NKL-IFNα cells was associated with the upregulation of cytotoxicity-related genes, such as perforin, granzyme B and Fas ligand, in the NK cells. Moreover, cytokines secreted by NKL-IFNα cells, such as tumor necrosis factor-α and IFN-γ, induced increased expression of Fas on the target HCC cells, and resulted in increased susceptibility of the HCC cells to NK-mediated cytolysis. Encouragingly, NKL-IFNα cells could significantly inhibit HCC tumor growth in a xenograft model and prolonged the survival of tumor-bearing nude mice. These results suggest that IFN-α gene-modified NKL cells could be suitable for the future development of cell-based immunotherapeutic strategies for hepatocellular carcinoma.