MicroRNAs (miRNAs) have been implicated in the orchestration of diverse cellular processes including differentiation, proliferation, and apoptosis and are believed to play pivotal roles as oncogenes and tumor suppressors. miR-122, a liver specific miRNA, is significantly down-regulated in most hepatocellular carcinomas (HCCs) but its role in tumorigenesis remains poorly understood. Here we identify AKT3 as a novel and direct target of miR-122. Restoration of miR-122 expression in HCC cell lines decreases AKT3 levels, inhibits cell migration and proliferation, and induces apoptosis. These anti-tumor phenotypes can be rescued by reconstitution of AKT3 expression indicating the essential role of AKT3 in miR-122 mediated HCC transformation. In vivo, restoration of miR-122 completely inhibited xenograft growth of HCC tumor in mice. Our data strongly suggest that miR-122 is a tumor suppressor that targets AKT3 to regulate tumorigenesis in HCCs and a potential therapeutic candidate for liver cancer.