Circular RNAs (circRNAs) are a novel class of RNAs, which involve in many physiological processes and participate in many diseases, especially in cancer. Previous reports showed circRNAs were globally downregulated in hepatocellular carcinoma (HCC) and a lot of circRNAs involved in the tumorigenesis and metastasis of HCC. To understand the underlying mechanism of circRNAs' reduction, we explored the relationship between circRNA biogenesis and NUDT21, which was a RNA splice factor downregulated in HCC, and we found that NUDT21 elevated the formation of circRNA, and the UGUA sequences were critical for the cyclization of circRNA. Knockdown of NUDT21 disrupted the competitive endogenous RNA (ceRNA) pathway of circRNA-miRNA-mRNA, and overexpression of the downregulated circRNA could assist the NUDT21-mediated tumor suppression in HCC cells. In conclusion, the loss of NUDT21 prevented the cyclization of circRNA in HCC; without circRNA absorption, miRNAs were released to suppress the tumor-suppressor genes, leading to the uncontrolled cell proliferation.