The aim of this study was to clarify whether chemoembolization (TACE) before liver resection (LR) can reduce postoperative hepatocellular carcinoma (HCC) recurrence and improve disease-free and overall survival. Eighty-nine patients with tumor-stage (TNM) I-II HCC were evaluated for LR. Patients were prospectively allocated to LR alone or TACE plus LR based on their place of residence. Twenty nonlocal patients (24%) were selected for LR, while 69 (77.5%) local patients were selected for TACE plus LR. Following TACE, the tumor stage could be confirmed in only 20 patients (29%) who then underwent LR. Operative mortality was 0%, but in the TACE-LR group, 3 patients died of liver failure between 2 and 5 months after surgery. Early recurrence (<24 months) was 59% for LR versus 20% for TACE plus LR (P <.05). Late recurrence was 18% for LR versus 10% for TACE plus LR (P = not significant [NS]). The overall recurrence rate was 76% for LR versus 30% for TACE plus LR (P <.02). Death due to HCC recurrence was 70% for LR versus 15% for TACE plus LR (P <.05). The overall 1- and 5-year survival rates did not differ significantly (71% to 38% for LR v 85% to 43% for TACE + LR; P = NS), whereas the difference in 1- and 5-year disease-free survival was highly significant (64% to 21% for LR v 82% to 57% for TACE + LR; P <.02). TACE was able to improve the HCC staging process and significantly reduce the incidence of early and overall HCC recurrence and related death after LR; it improved the disease-free interval, but not the overall survival, due to an increase in liver failure in the first 5 months.