Liver cirrhosis and hepatocellular carcinoma (HCC) are major causes of morbidity and mortality worldwide, without effective therapies. Our aim was to establish a novel approach for the diseases utilizing in-vivo gene therapy. To achieve effective gene expression in vivo, we employed a well-established transfection method, hemagglutinating virus of Japan (HVJ)-liposome. Liver cirrhosis, characterized by parenchymal collapse, was induced by dimethylnitrosamine (DMN) in rats, leading to accumulation of fibrous tissue. Muscle-directed gene transfer of hepatocyte growth factor (HGF) was performed in this model. As an approach for HCC therapy, suicide gene therapy using ganciclovir (GCV) with transfer of the herpes thymidine kinase (HSVtk) gene was tested. Alpha-fetoprotein (AFP) is highly expressed in many cases of HCC. To achieve specific gene expression of HSVtk in AFP-producing tumors, we employed the HSVtk gene driven by the AFP promoter (AFP-TK1), encapsulated in the HVJ-liposome. APF-producing HUH7 tumors in vivo were established in the livers of severe combined immunodeficiency (SCID) mice, by the injection of HUH7 cells into the portal vein. All cirrhotic rats died of liver dysfunction by 7 weeks after the initial injection of DMN. After repeated transfection with the HGF gene, increased concentrations of HGF in plasma and tyrosine phosphorylation of the c-Met/HGF receptor in the liver were detected, and the established massive hepatic fibrosis had almost totally disappeared and all cirrhotic rats survived. Repeated in-vivo transfection with AFP-TK1, using the HVJ-liposome, followed by GCV treatment, achieved abrogation of tumors in the liver, and improved survival. Our data indicate that the gene therapy may hold promise for the treatment of patients with liver cirrhosis and HCC.