TIPE1 (tumor necrosis factor-α-induced protein 8-like 1 or TNFAIP8L1) is a newly identified member of the TIPE (TNFAIP8) family, which play roles in regulating cell death. However, the biologic functions of TIPE1 in physiologic and pathologic conditions are largely unknown. Here, we report the roles of TIPE1 in hepatocellular carcinoma (HCC). Evaluated by immunohistochemical staining, HCC tissues showed significantly downregulated TIPE1 expression compared with adjacent non-tumor tissues, which positively correlated with tumor pathologic grades and patient survival. Using a homograft tumor model in Balb/c mice, we discovered that TIPE1 significantly diminished the growth and tumor weight of murine liver cancer homografts. Consistently, TIPE1 inhibited both cell growth and colony formation ability of cultured HCC cell lines, which was further identified to be due to TIPE1-inducing apoptosis in a caspase-independent, necrostatin-1 (Nec-1)-insensitive manner. Furthermore, mechanistic investigations revealed that TIPE1 interacted with Rac1, and inhibited the activation of Rac1 and its downstream p65 and c-Jun N-terminal kinase pathway. Moreover, overexpression of constitutively active Rac1 partially rescued the apoptosis induced by TIPE1, and Rac1 knockdown significantly restored the deregulated cell growth induced by TIPE1 small interfering RNA. Our findings revealed that TIPE1 induced apoptosis in HCC cells by negatively regulating Rac1 pathway, and loss of TIPE1 might be a new prognostic indicator for HCC patients.