Hepatocellular carcinoma (HCC) is one of the most prevalent tumors worldwide. Interferon-α (IFN-α) has been widely used in the treatment of HCC, but patients eventually develop resistance. ISG15 ubiquitin-like modifier (ISG15) is a ubiquitin-like protein transcriptionally regulated by IFN-α which shows antivirus and antitumor activities. However, the exact role of ISG15 is unknown. In the present study, we showed that IFN-α significantly induced ISG15 expression but failed to induce HepG2 cell apoptosis, whereas transient overexpression of ISG15 dramatically increased HepG2 cell apoptosis. ISG15 overexpression increased overall protein ubiquitination, which was not observed in cells with IFN-α-induced ISG15 expression, suggesting that IFN-α treatment not only induced the expression of ISG15 but also inhibited ISG15-mediated ubiquitination. The tumor suppressor p53 and p21 proteins are the key regulators of cell survival and death in response to stress signals such as DNA damage. We showed that p53 or p21 is only up regulated in HepG2 cells ectopically expressing ISG15, but not in the presence of IFN-α-induced ISG15. Our results suggest that ISG15 overexpression could be developed into a powerful gene-therapeutic tool for treating IFN-α-resistant HCC.