Therapeutic effect on 81 hepatectomized patients with hepatocellular carcinoma (HCC) less than 5cm in diameter was compared to that achieved by transcatheter arterial embolization therapy (TAE) in 61. The 5-year cumulative survival rate after hepatectomy was 38%, which was better than that of TAE (8%). Outcome after hepatectomy was better than that after TAE, according to tumor size in less than 2cm in diameter and single nodule. The 3-, and 5-year survival rates for curative hepatectomy were significantly better than those for TAE. But there was no significant difference in survival curves between relative noncurative hepatectomy and TAE. In terms of hepatic reserve with reference to Child's classification, the survival curve for TAE was better than that for relative noncurative hepatectomy in patients with Child-A, but there was no significantly difference between these two methods. Survivors more than 3 years after hepatectomy and TAE were 24 (48.0%) and 11 (23.4%) patients, respectively. Nineteen of 24 patients with hepatectomy had recurrent HCCs, of which reresection was done in 6, TAE in 11 and other treatments in 2. The advantage of hepatectomy in comparison with TAE is a possibility of long-term survival, if curative hepatectomy is performed.