The activating receptor natural killer group 2, member D (NKG2D) and its ligands play a crucial role in immune response to tumors. NKG2D ligand expression in tumors has been shown to be associated with tumor eradication and superior patient survival, but the involvement of NKG2D ligands in the immune response against hepatocellular carcinoma (HCC) still remains to be elucidated. We investigated the expression of NKG2D ligands in HCC tissues collected from 54 patients and HCC cell lines. We also examined the proteasome expression and the effect of inhibition of proteasome activity on NKG2D ligand expression in HCC tissues and cell lines. In dysplastic nodules (DN), well-differentiated (well-HCC), and moderately-differentiated HCCs (mod-HCC), UL16-binding protein (ULBP) 1 was expressed predominantly in tumor cells, but not in poorly-differentiated HCCs (poor-HCC). Remarkably, recurrence-free survival of patients with ULBP1-negative HCC was significantly shorter than that of patients with ULBP1-positive HCC (p=0.006). Cox regression analysis revealed that loss of ULBP1 expression was an independent predictor of early recurrence (p=0.008). We confirmed that ULBP1 was expressed in the well- and mod-HCC cell lines, but not in the poor-HCC cell line KYN-2. However, inhibition of proteasome activity resulted in significant up-regulation of ULBP1 expression in KYN-2. Moreover, we found that 20S proteasome expression was more abundant in KYN-2 than that in the well- and mod-HCC cell lines. ULBP1 is prevalently expressed in DN to mod-HCC, but loss of its expression correlates with tumor progression and early recurrence.