Approximately 20-40% of hepatocellular carcinoma (HCC) patients who undergo liver transplantation (LT) experience HCC recurrence within 5 years of the operation. Current predictors cannot sufficiently differentiate patients at risk for biochemical recurrence. The aim of the present study was to investigate the methylation status and expression levels of cell adhesion molecule 1 (CADM1) in HCC; to elucidate its regulation mechanisms; and finally, to evaluate the potential predictive value for tumor recurrence. Aberrant hypermethylation of CADM1 was frequently found in HCC cell lines with decreased CADM1 mRNA by bisulfite sequencing PCR. Re-expression of CADM1 was induced by treatment with demethylating agents. The promoter region of CADM1 was identified and the basal promoter activity was located in the -226 to -146 region relative to the transcriptional start site (TSS). Site-directed mutagenesis revealed that the consensus Sp1 binding site located in the basal promoter region was important for mediating CADM1 promoter activity. Furthermore, aberrant hypermethylation of CADM1 was detected in 34 of 82 (41.5%) of HCC tissues. The recurrence rate of the patients with CADM1 methylation was higher compared to that without CADM1 methylation (70.6% versus 33.3%; P=0.001). Multivariate analysis revealed that CADM1 methylation status (HR = 2.788; 95% CI, 1.043-5.063; P=0.010) was an independent prognostic factor for disease-free survival (DFS) of HCC patients treated with LT. In conclusion, CADM1 methylation may be used as a potential predictive biomarker for tumor recurrence of HCC after LT.