Expression of viral or bacterial enzymes in tumor cells to convert nontoxic prodrugs into highly toxic metabolites is an attractive gene-therapeutic approach for the treatment of hepatocellular carcinoma (HCC). The Escherichia coli purine nucleoside phosphorylase (PNP) converts purine analogs into freely diffusible metabolites, which are highly toxic to dividing and nondividing cells. We investigated the antitumor effects of PNP in the human HCC cell lines, HepG2, Hep3B, and HuH-7, and performed a comparison with herpes simplex thymidine kinase (TK). The genes for PNP, TK, and enhanced green fluorescent protein (EGFP) were delivered to HCC cells by identical adenoviral vectors. Fludarabine and ganciclovir (GCV) served as prodrugs for PNP and TK, respectively. Expression of PNP highly sensitized HCC cells to fludarabine treatment. Fludarabine concentrations between 0.5 and 1 μg/mL killed 100% of the cells expressing PNP with no detectable toxicity in control cells expressing EGFP. Expression of PNP in as few as 10% of HCC cells induced efficient killing of most bystander cells. Expression of TK followed by GCV treatment produced a potent growth inhibition but failed to kill all TK-expressing HCC cells. More importantly, the TK system exhibited a lower degree of bystander effect. Adenoviral delivery of PNP followed by fludarabine administration prevented subcutaneous and intrahepatic tumor formation in nude mice and was also effective for the treatment of established tumors. These results demonstrate the potential of the PNP/fludarabine system for the treatment of HCC.