A region on chromosome 4q25 has recently been highlighted as linked to hepatocellular carcinoma (HCC). In this study, we performed a family-based association analysis with 67 single-nucleotide polymorphisms (SNPs) to map this linkage region in 240 families with HCC, 212 (88.3%) of which were ascertained through hepatitis B virus surface antigen (HBsAg)-positive index cases. Individual SNP analysis with correction for multiple testing identified 10 SNPs in two correlated haplotype blocks, located in or around the 3'-phosphoadenosine 5'-phosphosulfate synthetase-1 (PAPSS1) gene (all P-values: <0.0075). Our linkage data and GIST (Genotype identity-by-descent sharing test) indicate that 6 of these 10 SNPs contributed to the linkage signal. The haplotype block of the strongest association with HCC extended from the intron 5 to the 3'-flanking region of PAPSS1; multiple consecutive three-SNP haplotypes in this region were significant. The most significant haplotype showed odd ratios of 3.41 (95% confidence interval (CI)=1.36-8.53) for homozygous individuals in a case-unaffected sibling analysis. This haplotype also revealed an association with elevated serum alpha-fetoprotein and with poor survival in familial cases and an independent series of HBsAg-positive cases with small tumor present at the time of hospital admission. These results implicate PAPSS1 as a candidate HCC-susceptibility gene in hepatitis B carriers.