BACKGROUND Hepatocellular carcinoma (HCC) is a common cause of cancer death throughout the world. The majority of patients are not suitable for curative resection either because of the advanced stage of the disease at the time of presentation or because of underlying cirrhosis. Transcatheter intraarterial lipiodol chemoembolization (TACE) has been reported to be one of the most effective palliative measures for HCC. However, its severe side effects continue to make its use controversial. METHODS In the current study, the authors prospectively evaluated 197 sessions of TACE performed in 59 patients with HCC. RESULTS Acute hepatic decompensation occurred in 20% of the 197 sessions with 3% of cases being irreversible. Significant elevation of bilirubin was associated with the dosage of cisplatin used ( P = 0.0001), basal bilirubin level ( P = 0.0001), basal prothrombin time ( P =0.004), basal aspartate aminotransferase (AST) level ( P = 0.013), and stage of cirrhosis ( P < 0.0001). Patients with irreversible hepatic decompensation were more likely to have higher pre‐TACE bilirubin levels ( P = 0.009), more prolonged prothrombin time ( P = 0.015), received a higher dose of cisplatin ( P = 0.033), and more advanced cirrhosis ( P < 0.0001). The majority of the other side effects were self‐limiting with the exception of one patient who died of liver and splenic abscesses. Approximately 36% of the patients achieved a tumor response, 39% achieved stable disease, and 29% developed progressive disease. CONCLUSIONS The results of the current study identified factors that appeared to predispose patients to irreversible hepatic decompensation after TACE. Despite the high percentage of patients who developed hepatic decompensation after TACE, irreversible damage occurred in only a minority. Cancer 2002;94:1747–52. © 2002 American Cancer Society. DOI 10.1002/cncr.10407