Abstract Background FOXP3 has been discovered to be expressed in tumor cells and participate in the regulation of tumor behavior. Herein, we investigated the clinical relevance and biological significance of FOXP3 expression in human hepatocellular carcinoma (HCC). Methods Expression profile of FOXP3 was analyzed using real-time RT-PCR, western blotting and immunofluorescence on HCC cell lines, and immunostaing of a tissue microarray containing of 240 primary HCC samples. The potential regulatory roles of FOXP3 were dissected by an integrated approach, combining biochemical assays, analysis of patient survival, genetic manipulation of HCC cell lines, mouse xenograft tumor models and chromatin immunoprecipitation (ChIP) sequencing. Results FOXP3 was constitutively expressed in HCC cells with the existence of splice variants (especially exon 3 and 4 deleted, Δ3,4-FOXP3). High expression of FOXP3 significantly correlated with low serum α-fetoprotein (AFP) level, absence of vascular invasion and early TNM stage. Survival analyses revealed that increased FOXP3 expression was significantly associated with better survival and reduced recurrence, and served as an independent prognosticator for HCC patients. Furthermore, FOXP3 could potently suppress the proliferation and invasion of HCC cells in vitro and reduce tumor growth in vivo. However, Δ3,4-FOXP3 showed a significant reduction in the tumor-inhibiting effect. The inhibition of FOXP3 on HCC aggressiveness was acted probably by enhancing the TGF-β/Smad2/3 signaling pathway. Conclusion Our findings suggest that FOXP3 suppresses tumor progression in HCC via TGF-β/Smad2/3 signaling pathway, highlighting the role of FOXP3 as a prognostic factor and novel target for an optimal therapy against this fatal malignancy.