AIM To study the inhibitory effect of all-trans retinoic acid on human hepatocellular carcinoma cell line SMMC-7721 and to explore the mechanism of its effect. METHODS SMMC-7721 cells were divided into two groups, one treated with all-trans retinoic acid (ATRA) for 5 days and the other as a control group. Light microscope and electron microscope were used to observe the morphological changes. Telomerase activity was analyzed with silver-stained telomere repeated assay protocal (TRAP). Expression of Caspase-3 was demonstrated with western blot. RESULTS ATRA-treated cells showed differentiation features including small and pyknotic nuclei, densely stained chromatin and fewer microvilli. Besides, ATRA could inhibit the activity of telomerase, promote the expression of Caspase-3 and its activation. CONCLUSION Telomerase activity and Caspase-3 expression are changed in human hepatocellular carcinoma cell line SMMC-7721 treated with all-trans retinioc acid. The inhibition of telomerase activity and the activation of Caspase-3 may be the key steps through which ATRA inhibits the proliferation of SMMC-7721 cell line.