Metformin is used as a first-line therapy for type 2 diabetes, with reports of its usefulness for the prevention and control of several types of cancers. This study investigated the effects of metformin on hepatocellular carcinoma (HCC). The human HCC cell lines HepG2 and PLC/PRF/5 were cultured and treated with metformin or 5-aminoimidazole-4-carboxamide ribonucleoside (AICAR), an activator of adenosine monophosphate (AMP)-activated protein kinase. Changes in cell viability and cell cycle distribution were evaluated by MTT and flow cytometry, respectively. Apoptosis was assessed by fluorescent-dye staining. An HCC model was established in 6- to 8-week-old BALB/c-nu mice by subcutaneous injection of PLC/PRF/5 cells. After 1 week, mice were treated intragastrically with metformin or vehicle. Tumor xenograft tissues were examined using immunohistochemistry for evaluation of the the expression of cyclin D1, p21CIP and p27KIP. HCC cells and tissues from the in vitro and in vivo experiments, respectively, were subjected to protein extraction and western blotting. We found that metformin treatment reduced HCC cell viability in a dose-dependent manner similar to AICAR treatment. In addition, metformin treatment induced HCC cell cycle arrest at G1/G0 phase and apoptosis. Intragastric treatment of the mouse PLC/PRF/5 cell xenograft model with metformin showed that metformin not only blocked tumor progression, but also reduced tumor morbidity. Treatment with metformin upregulated the expression of p21CIP and p27KIP, but downregulated cyclin D1 levels, both in vitro and in vivo. Metformin treatment also upregulated the expression of phosphorylated AMPK protein in xenograft tissues. These findings indicate that metformin warrants further evaluation as a novel therapeutic and preventive strategy against HCC.