Introduction Exposure to inorganic arsenic (InAs) has been known as a risk factor for liver cancer. However, documents have indicated that specific forms of arsenic may inhibit the activity of hepatitis viruses. This study investigated the association between InAs exposure and liver cancer occurrence while examining the effects of arsenic methylation capacity in an exposed cohort. Material and methods This study followed 4056 residents, an average of 19.2 years of follow-up, from an arseniasis area in Taiwan, and identified 90 liver cancer cases. The inorganic arsenic metabolites were determined by ICP-MS and methylation capacity was calculated from the combination of InAs, monomethylarsonic acid (MMA), and dimethylarsinic acid (DMA). The primary methylation index (MMA/InAs) and the secondary methylation index (DMA/MMA) and their median high/low combinations were used. Cox proportional hazards model was performed to calculate the hazard ratio (HR) of liver cancer occurrence. Results and discussions The analyses revealed a significant association between liver cancer occurrence and arsenic methylation capacity, which demonstrated a lower risk of the participants with low secondary methylation index. The results showed that participants with lower primary and lower secondary methylation index than their respective median values were at a lower risk of liver cancer (HRs from 0.230 to 0.231) than those with high methylation capacity. The incidence density of liver cancer ranging from 48.2/100,000 (year-1) to 100.4/100,000 (year-1) for residents with low secondary methylation index and from 99.1/100,000 (year-1) to 186.8/100,000 (year-1) for residents with high secondary methylation index when the arsenic exposure dose was classified into quartiles. Conclusion Hypomethylation responses to InAs exposure may associate with lower liver cancer occurrence. Two mechanisms were conjectured. First, a specific forms of arsenic may inhibit the hepatitis viral activity. Second, hypermethylation activities among residents chronically exposed to inorganic arsenic may induce arsenic carcinogenesis, which warrants for further investigations.