Oncogenic activation of the WNT/beta-catenin signaling pathway is common in hepatocellular carcinoma (HCC). Dishevelled (Dvl), a key activator of the pathway, inhibits the adenomatous polyposis coli complex, and this leads to the accumulation of beta-catenin and promotes tumorigenesis. Recently, a novel inhibitor of Dishevelled, namely Dapper (Dpr), was isolated in Xenopus. To explore whether HDPR1, the human homologue of Dpr, has an anti-oncogenic role in hepatocarcinogenesis, we studied the expression of this gene in HCCs. We found that there were two alternatively spliced transcripts of HDPR1, designated as alpha and beta forms, in human liver. Downregulation of the gene expression was observed in 31 (43%) of the 72 human HCC samples using the primer pair that amplified both transcripts. Furthermore, the HDPR1alpha was downregulated in 42 (58%) of 72 human HCCs and the downregulation significantly correlated with accumulation of beta-catenin. Also, downregulation of HDPR1 by RNA interference in HLE cells led to cytoplasmic accumulation of beta-catenin. Furthermore, a CpG island located at the promoter region and exon 1 of the HDPR1 gene was methylated in 22 (51%) of human HCCs. We showed that downregulation of HDPR1, in hepatoma cell lines, was associated with methylation of this CpG island using bisulfite sequencing and 5-aza-2'-deoxycytidine demethylation experiment. In addition to methylation-mediated downregulation of HDPR1, allelic loss (13-28% of informative cases) was detected using microsatellite markers flanking the HDPR1 locus. To conclude, downregulation of HDPR1 is common in HCCs, frequently involves hypermethylation of the promoter region, and allelic loss of the HDPR1 locus may also play a role.