Background: Circular RNAs (circRNAs) play important roles in the progression of cancers, but the precise role of circRNAs in the diagnosis and prognosis of hepatocellular carcinoma (HCC) remains to be clarified. The aim of the current study was to explore the diagnostic and prognostic values of hsa_circ_0003998 in HCC. Methods: CircRNAs expression was measured using RNA-seq analysis from HCC tissues (n=6) (three cases with or without portal vein invasion). Hsa_circ_0003998 in 200 pairs of HCC and adjacent noncancerous tissues and HCC cell lines was examined using qRT-PCR and the clinicopathologic significance was determined. We also detected the plasma levels of hsa_circ_0003998 in HCC, hepatitis B patients and healthy controls. The clinical diagnosis and prognostic values were further determined using receiver operating characteristic (ROC) curve, Kaplan-Meier curve and Cox regression. Results: Hsa_circ_0003998 was upregulated in HCC tissues (P<0.001) and HCC cell lines (HepG2, HuH7, MHCC97H) (P<0.001). In addition, upregulation of hsa_circ_0003998 level was associated with higher serum alpha-fetoprotien (AFP) level (P=0.003), larger tumor diameter (P=0.009), lower differentiation level (P=0.023) and microvascular invasion (P=0.028). The plasma level of hsa_circ_0003998 in HCC patients was significantly higher than those in hepatitis B patients (P<0.001) and healthy controls (P<0.001). Its level was significantly reduced after the operation (P<0.001). The area under the ROC curve (AUC) for distinguishing HCC from adjacent noncancerous tissues was 0.894 (95% CI=0.86-0.922, P<0.001), the sensitivity and specificity were 0.84 and 0.8, respectively. Comparing with hepatitis B patients and healthy controls, hsa_circ_0003998, respectively, had an AUC value of 0.833 (95% CI=0.763-0.889, P<0.001) and 0.892 (95% CI=0.831-0.937, P<0.001). Their sensitivity and specificity were 0.83, 0.7 and 0.8, 0.84, respectively. Moreover, the combination of hsa_circ_0003998 and AFP showed the highest AUC value of 0.947, the sensitivity and specificity were 0.88 and 0.92, respectively. The hsa_circ_0003998 (P=0.003) and AFP (P=0.008) levels were independent prognostic factors for HCC. The overall survival of HCC patients with high level of hsa_circ_0003998 was significantly poorer than those with low level (P= 0 .005). Conclusion: Our findings suggest that hsa_circ_0003998 may be used as a novel potential biomarker for the diagnosis and prognosis of HCC patients.