Lentinula edodes mycelia (L.E.M.) is a dried powder extracted from shiitake mushrooms (Lentinula edodes). We previously demonstrated that it has immunomodulatory effects. In this paper, the direct cytotoxic effects of the polysaccharide-rich fraction of L.E.M. (L.E.M. ethanol precipitate; LEP) on HepG2 human hepatocellular carcinoma (HCC) cells were investigated. LEP directly killed the HepG2 cells efficaciously, but had only minor effects on normal rat hepatocytes and normal mouse dermal cells under the same conditions. Characteristic morphological changes associated with apoptosis such as shrinkage, rounding, and floating as well as chromatin condensation were confirmed; terminal deoxynucleotidyl transferase-mediated deoxyuridine triphosphate nick-end labeling (TUNEL) staining was positive as determined by fluorescence microscopy analyses. The caspase-3 and -8 death receptor pathway was found largely responsible for the apoptotic death of HepG2 cells treated with LEP. In conclusion, LEP can directly induce apoptosis of HepG2 cells, and thus may have potential chemotherapeutic applications for the treatment of HCC.