Tumor metastasis is a complex process modulated by both intrinsic and extrinsic factors that ultimately result in poorer patient outcomes, including diminished survival. Pseudogene-derived long non-coding RNAs (lncRNA) play important roles in cancer progression. In the current study, we found that the pseudogene-derived lncRNA LPAL2 is downregulated in hepatocellular carcinoma (HCC) tissues, and further showed that elevated LPAL2 expression is positively correlated with survival outcome. The knockdown of LPAL2 in hepatoma cells induced tumor formation, migration, invasion, sphere formation, and drug resistance. Metalloproteinase 9 (MMP9) was identified as an LPAL2-regulated target gene, consistent with clinical findings that LPAL2 expression is significantly associated with MMP9 expression. Furthermore, patients with a higher expression of LPAL2 and lower expression of MMP9 (LPAL2-high/MMP9-low) had a higher survival rate than those with other combinations. Collectively, our findings establish LPAL2 as a novel tumor suppressor in HCC, and suggest targeting LPAL2 and MMP9 as a therapeutic approach for the treatment of HCC.