Liver resection or transplantation offers the best opportunity for cure of hepatocellular carcinoma (HCC). To determine the relative roles for resection and transplantation and to evaluate the patient and tumor characteristics that might predict survival, the records of 125 patients treated for nonfibrolamellar HCC at The Toronto Hospital between 1981 and 1996 were reviewed. No adjuvant chemotherapy or antiviral protocols were used. Resection was the first operation in 67 patients; one underwent re-resection. Sixty patients underwent transplantation including two who had previously had a resection; 40 had known or suspected HCC and 20 had incidental tumors identified in the explanted liver. The incidence of cirrhosis was 49% for resection and 88% for transplantation. The incidence of hepatitis B virus (HBV) was 58% and 33%, respectively. The operative mortality rate for resection was 4.4% (9.4% in cirrhotic and 0 in noncirrhotic patients) and 13.3% for transplantation. The 5-year cumulative recurrence rate was 55% following resection and 20% following transplantation (P <0.001). The 5-year Kaplan-Meier survival rates were 38% for resection and 45% for transplantation-60% for transplanted HBV-negative and 17% for HBV-positive patients (P <0.001). After resection, recurrent HCC accounted for 86% of deaths, whereas recurrent HBV was responsible for 42% of deaths after transplantation. By univariate analysis, following resection, vascular invasion, advanced stage, multiple tumors, and lack of a capsule were predictive of survival; cirrhosis, HBV, age, tumor size, number, and grade were not. By multivariate analysis, only vascular invasion was predictive for resection and HBV for transplantation. Resection and transplantation are complementary methods of treating HCC. With the current organ shortage, resection should be considered first-line treatment. HBV-positive patients with HCC should only undergo transplantation in combination with effective antiviral therapy.