BACKGROUND This study was to evaluate the outcome and the prognostic factors of unresectable hepatocellular carcinoma (HCC) patients with 125I radioactive seeds implantation, who had failed transcatheter arterial chemoembolization (TACE). METHODS From September 2002 to March 2006, 48 patients with unresectable HCC underwent 125I permanent implantation brachytherapy. Thirty-eight patients were male and 10 were female. Mean age was 59 years, ranginging from 32 to 86. Karnofsky performance status(KPS) was 100 in 10 patients, 80 in 21 patients, and 60 in 17 patients. According to Child-Pugh classification of liver, 34 patients were in class A and 14 patients in class B. Twenty-two patients had alpha-fetoprotein (AFP) level > 400 ng/ml. Tumor size was < 5cm in 17 patients, 5-10 cm in 18 patients, and > 10cm in 13 patients. Thirty-four patients had confluent tumors, 14 patients presented single hepatic tumor. Serum hepatitis antigen markers were positive for type B in 38 patients and type C in 10 patients. Twenty-two patients had Okuda Stage I, 24 patients Stage II, and 2 patients Stage III. According to the AJCC staging system (6th edition), 10 patients were in Stage II (T2N0M0), 20 in Stage IIIa (T3N0M0) and 18 in Stage IIIb (T4N0M0). RESULTS An objective response was observed in 34 of 48 patients, giving a response rate of 70.8%. The survival rates at 1, 2 and 3 years were75%, 45.8% and 27.1%, respectively. In the analysis of prognostic factors, tumor type, tumor size, Okuda stage, AJCC stage, Liver Child-Pugh, pretreatment AFP level, and matched peripheral dose (MPD) all had significant impact on survival. CONCLUSIONS The 125I permanent implantation brachytherapy induced a substantial tumor response rate of 70.8% with survival rates at 1, 2 and 3 years of 75%, 45.8% and 27.1%, respectively, and a median survival time of 15.5 months in patients with unresectable HCC who had failed TACE. The complications are acceptable and can be managed with conservative treatment. Although we do not know whether there is a survival benefit through the use of this treatment, 125I permanent implantation brachytherapy seems to be a practical method of salvage for this subset of patients. Further study is warranted to evaluate the survival of such patients with controlled trial.