Objective To investigate cell penetrating peptide (PEP-1)-mediated transduction of recombinant hepatocyte nuclear factor 4 alpha (HNF4α) protein into hepatocellular carcinoma (HCC) cells, and to observe the effect of the fusion protein P-HNF4α on HCC cells. Methods The expression vector pET28a-P-HNF4α was constructed. The prokaryotic expression condition of fusion protein P-HNF4α was optimized. Recombinant P-HNF4α carrying cell penetrating peptide PEP-1 was obtained by abundant expression, purified by affinity chromatography, and was concentrated and dialyzed. P-HNF4α was transduced into HCC cells. The transduction efficiency was analyzed by Western blotting analysis. Sub-cellular localization of P-HNF4α was detected by Western blotting analysis with nuclear and cytoplasmic extracts and confirmed by immunofluorescence assay. Real-time RT-PCR was used to examine the gene expression of HCC cells. The proliferation of HCC cells was detected with CCK-8 kit. The migration and invasion of HCC cells were detected by wound-healing assay and trans-well invasion assay, respectively. Results P-HNF4α was efficiently transduced into Huh7 cells and located in the nucleus as mediated by PEP-1. P-HNF4α significantly up-regulated the expression of characteristic hepatocyte markers and down-regulated the "stemness" genes in Huh7 cells (P<0.05 or P<0.01). Moreover, the proliferation (P<0.05), migration (P<0.001) and invasion (P<0.05) of HCC cells were significantly suppressed by fusion protein P-HNF4α. Conclusion P-HNF4α can induce the differentiation of HCC cells to mature hepatocytes and reduce the malignancy phenotype of HCC cells, suggesting that PEP-1-mediated HNF4α protein transduction may be a potential strategy for HCC differentiation therapy.