The telomere hypothesis of cancer initiation indicates that telomere shortening initiates cancer by induction of chromosomal instability. To test whether this hypothesis applies to human hepatocellular carcinoma (HCC), we analyzed the telomere length of hepatocytes in cytological smears of fine-needle biopsies of liver tumors from patients with cirrhosis (n = 39). The tumors consisted of 24 HCC and 15 regenerative nodules as diagnosed by combined histological and cytological diagnostics. In addition, we analyzed the telomere length of hepatocytes in HCC and surrounding noncancerous liver tissue within individual patients in another cohort of 10 patients with cirrhosis. Telomere length analysis of hepatocytes was correlated with tumor pathology and ploidy grade of the tumors, which was analyzed by cytophotometry. Telomeres were significantly shortened in hepatocytes of HCC compared to hepatocytes in regenerative nodules or surrounding noncancerous liver tissue. Hepatocyte telomere shortening in HCC was independent of the patient's age. There was no overlap in mean telomere lengths of individual samples when comparing HCC with regenerative nodules or noncancerous surrounding liver. Within the HCC group, telomeres were significantly shorter in hepatocytes of aneuploid tumors compared to diploid tumors. In conclusion, our data suggest that the telomere hypothesis of cancer initiation applies to human HCC and that cell type-specific telomere length analysis might indicate the risk of HCC development.