BACKGROUND To compare the survival impacts of radiofrequency ablation (RFA) as an initial treatment for hepatocellular carcinoma (HCC) in patients with impaired liver functional reserve compared to those of hepatic resection (HR). METHODS In total, 104 patients with liver damage B as defined by the Liver Cancer Study Group of Japan underwent RFA (n = 33) or HR (n = 71) as an initial treatment for hepatocellular carcinoma. The overall survival (OS) and disease-free survival (DFS) rates were compared, and independent prognostic factors were identified. RESULTS The OS tended to be better in the RFA group than in the HR group. There was no significant difference in the DFS rate between the two groups. Independent poor prognostic factors for OS were tumor size >3 cm and red blood cell transfusion, and those for DFS were aspartate aminotransferase level >35 IU/L and multiple tumors. Subgroup analyses revealed that the OS with RFA was significantly better in patients with aspartate aminotransferase >35 IU/L, serum albumin <3.5 g/dL, and 99mTc-galactosyl human serum albumin <0.85. CONCLUSIONS RFA offers comparable results with HR and may be preferable for HCC in the particular setting of liver damage B, especially in those with poorer liver functional reserve.