Activated hepatic stellate cells (HSCs) play a central role in the hepatic fibrosis and cirrhosis. Recently, HSCs were reported to have strong immune modulatory activities. However, the role of HSCs in hepatocellular carcinoma (HCC) remains unclear. In this study, we showed that HSCs could promote HCC growth bothin vitroandin vivo. We examined the HSC-mediated inhibition of T-cell proliferation and the ability of conditioned medium from activated HSCs to promote the growth of murine HCC cell linesin vitro. We also assessed the immune suppression by HSCs during the development of HCC in immunocompetent mice. Cotransplantation of HSCs promoted HCC growth and progression by enhancing tumor angiogenesis and tumor cell proliferation and by creating an immunosuppressed microenvironment. Cotransplanted HSCs inhibited the lymphocyte infiltration in tumors and the spleens of mice bearing tumors, induced apoptosis of infiltrating mononuclear cells, and enhanced the expression of B7H1 and CD4+CD25+ Treg cells. The immune modulation by HSCs seemed to be systemic. In conclusion, our data provide new information to support an integral role for HSCs in promoting HCC progression in partviatheir immune regulatory activities, and suggest that HSCs may serve as a therapeutic target in HCC.