Background While the majority of studies report that a raised serum α-fetoprotein (AFP) level before operation is associated with a high risk of recurrence and death in patients who undergo hepatectomy for hepatocellular carcinoma (HCC), results are conflicting. The aim of this study was to assess the prognostic value of AFP. Methods Serum AFP levels were measured in patients with hepatitis-associated HCC who underwent hepatectomy between 1995 and 2012. Kaplan-Meier and multivariable analyses were performed to identify risk factors for overall and disease-free survival. Univariable and multivariable Cox proportional hazards regression was used to evaluate the predictive value of AFP. Receiver operating characteristic (ROC) curves were generated to identify the AFP level that had the highest accuracy in discriminating between survivors and non-survivors. Results Some 376 patients with hepatitis B virus (HBV)-associated HCC were included in the study. The overall survival rate was 58·8 per cent in patients with an AFP level of 400 ng/ml or less compared with 40·4 per cent for those with a level exceeding 400 ng/ml (P = 0·001). AFP concentration above 400 ng/ml was an independent risk factor for shorter disease-free and overall survival after surgery. ROC analysis indicated that the optimal cut-off values for AFP varied for different subtypes of HCC. The sensitivity and specificity were lower with areas under the ROC curve of less than 0·600. An AFP level greater than 400 ng/ml was not sensitive enough to predict the prognosis in patients with an HCC diameter smaller than 3 cm. Conclusion A serum AFP level above 400 ng/ml predicts poor overall and recurrence-free survival after hepatectomy in patients with HBV-associated HCC. AFP is not a strong prognostic marker given its poor discriminatory power, with low sensitivity and specificity. © 2016 BJS Society Ltd Published by John Wiley & Sons Ltd.