Hepatocellular carcinoma (HCC) is a tumor of increasing incidence and high mortality worldwide. Diagnosis of HCC is often difficult, especially at early stages of disease. Additionally, current treatment options are limited. HCC usually develops in an environment of chronic liver disease. The immune system has an important role in shaping this environment, especially in chronic viral hepatitis, the leading cause of HCC. However, the immune system also plays a role in natural immunity against HCC although this is apparently not sufficient to control the majority of tumors. This failure in tumor control is due to multiple immunomodulatory mechanisms employed by HCC to subvert the immune system. In this review, we will summarize the current knowledge about the role of the immune system in hepatocarcinogenesis. Additionally, we will describe the mechanisms used by the immune system to control established lesions and the reasons why these immune responses apparently fail so often. Finally, possible implications for the design of novel immunotherapeutic strategies will be discussed.