As a member of the tissue inhibitor of metallo-proteinases (TIMP) family, it has been reported that TIMP-3 is involved in human cancer development. However, the function of TIMP-3 in hepatocellular carcinoma (HCC) development is unclear. We aimed to determine the biological role of TIMP-3 in HCC by evaluating the effects of its methylation status and expression on HCC cell function. TIMP-3 expression in HCC tissues was visibly analyzed by immunohistochemistry. Methylation of the TIMP-3 promoter was evaluated by methylation-specific PCR. Effects of TIMP-3 on HCC cell growth, apoptosis, migration, and invasion were examined by transfecting the TIMP-3-expressing plasmid, pCMV6. TIMP-3 was expressed in non-tumorous live tissue, but silenced or downregulated in 60% of HCC cases (P<0.05). Reduced protein expression of TIMP-3 was associated with reduced tumor differentiation (P=0.003) and increased metastatic activity (P=0.005) in HCC cell lines. Promoter methylation contributed to the TIMP-3 inactivation. Overexpression of TIMP-3 in HCC cell lines suppressed cell proliferation, induced apoptosis, and inhibited migration and invasion in vitro. TIMP-3 expression is suppressed by promoter methylation in HCC. This inhibitory protein acts as a functional tumor suppressor by inhibiting HCC cell proliferation, invasion, and migration and by inducing apoptosis and cell cycle arrest at the G2/M phase.