Ras converting CAAX endopeptidase 1 (RCE1) is an integral membrane protease involved in cell proliferation, differentiation, and carcinogenesis. RCE1 plays opposite roles in different tumor types; however, the actual biological function of RCE1 in hepatocellular carcinoma (HCC) is unknown. Here, we aim to investigate the prognostic value and molecular function of RCE1 in HCC. We performed immunohistochemistry in 20 normal human liver, 216 HCC, and 216 adjacent non-tumorous tissues and analyzed the expression change and clinical value of RCE1. Additionally, in vitro and in vivo studies were performed to investigate the role of RCE1 in regulating HCC proliferation, invasion, and metastasis. We found decreased RCE1 expression in HCC tissues. Moreover, the RCE1 expression level was negatively correlated with pathological parameters characteristic of early recurrence (P < 0.044) and the serum alpha-fetoprotein (AFP) level (P < 0.018). Survival analysis indicated that reduced RCE1 expression was a predictor of poor outcomes in patients with HCC. Functional studies showed that the knockdown of RCE1 promoted proliferation, migration, and invasion of HCC cells, while RCE1 overexpression suppressed these effects. In vivo studies further confirmed that the stable knockdown of RCE1 resulted in more rapid tumor growth and an increased number of lung metastatic nodules. Mechanistically, we found that RCE1 deficiency induced epithelial-mesenchymal transition (EMT) via activation of the P38 signaling pathway. Collectively, these results indicate that RCE1 deficiency enhances invasion via promoting epithelial-mesenchymal transition. The downregulation of RCE1 in HCC tissues predicts an unsatisfactory prognosis for patients with HCC. AJTR Copyright © 2020.