Background Telomerase expression and the maintenance of a critical telomere length (TL) in cancer initiation indicates that telomere shortening and telomerase expression initiates cancer by induction of chromosomal instability. Methods Telomerase activity, TL and human telomerase reverse transcriptase (hTERT) expression were investigated in 58 hepatocellular carcinoma (HCC) and 17 chronic hepatitis patients by the telomerase repeat amplification protocol, Southern blotting and reverse transcriptase-polymerase chain reaction. Results Telomerase was positive in 76% of HCC and 11.8% of chronic hepatitis patients (P < 0.0001). The mean telomere length (MTL) in HCC was significantly shorter compared with chronic hepatitis (P < 0.0001). The MTL was not significantly different in HCC patients with and without cirrhosis (P=0.77). In hepatitis B virus, hepatitis C virus and non-B non-C-related HCC groups, no differences were found in telomerase activity and MTL (P=0.77). hTERT, a regulator of telomerase, was, however, positive in 81% of HCCs. The correlation between telomerase activity and hTERT mRNA expression was statistically significant (P < 0.0001). The MTL in telomerase-positive HCC cases was significantly shorter than the MTL in telomerase-negative cases (P < 0.0001). Conclusion The majority of HCCs exhibited telomerase activity that correlated well with hTERT expression. MTL in HCC was significantly shorter than chronic hepatitis. It was also found that shorter telomeres are present in telomerase-positive HCC cases. However, no correlation was found between telomerase activity and TL with respect to the viral status in HCC.