Hepatocellular carcinoma (HCC) is frequently associated with liver cirrhosis. Patients with HCCs undergoing surgical resection may have declining hepatic functional reserve over time. However, the incidence and risk factors of hepatic decompensation, and its relation to postoperative tumor recurrence are unknown. This study investigated 241 HCC patients (208 male; age 61 +/- 13 years) undergoing resection with a long-term follow-up. The Child-Pugh scoring system was used to evaluate the postoperative deterioration of liver reserve, defined as a sustained increment in the Child-Pugh score by 2 or more. The 1-, 3-, and 5-year cumulative probabilities of postoperative decompensation were 14%, 32%, and 56%, respectively, during a follow-up period of 27 +/- 18 months (range 3-75 months). The average increment in Child-Pugh score was 1.4 +/- 1.1 in 2.3 +/- 1.5 years, or 0.6 point per year. Altogether, 74 (31%) patients developed postoperative hepatic decompensation during the follow-up period, 43 (58%) of whom had decompensation within 2 years of resection. Large (> 3 cm) tumor size was the only independent predictor associated with hepatic decompensation (relative risk 1.7, 95% confidence interval 1.1-2.8, p = 0.041) and was a significant risk factor for intrahepatic tumor recurrence ( p = 0.018). Patients with tumor recurrence more frequently (40% of 109 patients vs. 23% of 132 patients, p = 0.005) and more rapidly (0.8 vs. 0.4 point per year) developed hepatic decompensation than those without recurrence. In conclusion, large HCCs are closely associated with hepatic decompensation in patients after resection. Tumor recurrence may predispose to the development of hepatic decompensation in these patients.