Panaxydol, a polyacetylenecompound isolated fromPanax ginseng, exerts anti-proliferative effects againstmalignant cells. No previous study, however, has been reported on its effects on hepatocellular carcinomacells. Here,we investigated the effects of panaxydol on the proliferation and differentiation of human hepatocarcinomacell line HepG2.We studied by electronic microscopy of morphological and ultrastructuralchanges induced by panaxydol. We also examined the cytotoxicities of panaxydol against HepG2 cellsusing the 3-(4,5-dimethyl-2-thiazolyl)-2,5-diphenyl tetrazolium bromide assay and the effect of panaxydolon cell cycle distributions by flow cytometry. We investigated the production of liver proteins inpanaxydol-treated cells including alpha-fetoprotein and albumin and measured the specific activity ofalkaline phosphatase and gamma-glutamyl transferase.We further investigated the effects of panaxydolon the expression of Id-1, Id-2, p21 and pRb by RT-PCR or immunoblotting analysis.We found that panaxydolinhibited the proliferation of HepG2 cells and caused morphological and ultrastructural changes inHepG2 cells resembling more mature forms of hepatocytes. Moreover, panaxydol induced a cell cyclearrest at the G1 to S transition in HepG2 cells. It also significantly decreased the secretion of alphafetoproteinand the activity of gamma-glutamyl transferase. By contrast, panaxydol remarkably increasedthe secretion of albumin and the alkaline phosphatase activity. Furthermore, panaxydol increased themRNA content of p21 while reducing that of Id-1 and Id-2. Panaxydol also increased the protein levelsof p21, pRb and the hypophosphorylated pRb in a dose-dependent manner. These findings suggest thatpanaxydol is of value for further exploration as a potential anti-cancer agent.