Hepatocellular carcinoma (HCC) is a common and lethal tumor worldwide. Atractylenolide II (AT-II) is a natural sesquiterpenoid monomer, with anti-tumor effect. To address the effect and mechanisms of AT-II on HCC. The role and mechanisms of AT-II were assessed through cell counting kit-8, flow cytometry, enzyme-linked immunosorbent assay, immunofluorescence, and western blot experiments in Hep3B and Huh7 cells. In vivo experiments were conducted in BALB/c nude mice using immunohistochemistry and western blot assays. AT-II decreased the cell viability of Hep3B and Huh7 cells with a IC50 of 96.43 µM and 118.38 µM, respectively. AT-II increased relative Fe2+ level, which was further promoted with the incubation of erastin and declined with the ferrostatin-1 in Hep3B and Huh7 cells. AT-II enhanced the level of ROS and MDA, but reduced the GSH level, and the expression of xCT and GPX4. AT-II elevated the percent of CD8+ T cells and the IFN-γ contents, and declined the IL-10 concentrations and the expression of PD-L1 in Hep3B and Huh7 cells. AT-II downregulated the relative protein level of TRAF6, p-p65/p-65, and p-IkBα/IkBα, which was rescued with overexpression of TRAF6. Upregulation of TRAF6 also reversed the effect of AT-II on proliferation, ferroptosis, and immune escape in Hep3B cells. In vivo, AT-II reduced tumor volume and weight, the level of GPX4, xCT, and PD-L1, and the expression of TRAF6, p-p65/p-65, and p-IkBα/IkBα, with the increased expression of CD8. AT-II modulated the proliferation, ferroptosis, and immune escape of HCC cells by downregulating the TRAF6/NF-κB pathway.