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<i>Objectives:</i> Thalidomide has been shown to have antitumor activity in some patients with advanced hepatocellular carcinoma (HCC). We initiated a phase II study to determine the safety and efficacy of adding metronomic chemotherapy to thalidomide as first-line therapy. <i>Methods:</i> This open- labeled, single-arm, multicentered, investigator-initiated study enrolled patients with treatment-naïve advanced HCC not amenable to locoregional therapies. Treatment included oral thalidomide (100 mg twice daily) and tegafur/uracil [125 mg/m<sup>2</sup> (based on tegafur) twice daily]. Tumor assessment was performed according to Response Evaluation Criteria in Solid Tumors (RECIST) 1.0. Pretreatment plasma levels of angiogenesis factors were correlated with patient outcomes. <i>Results:</i> Forty-three patients were included. Sixteen (37%) patients had a Cancer of the Liver Italian Program (CLIP) score of 4, and 31 (72%) patients had chronic hepatitis B virus infection. The objective response rate was 9%, and the disease stabilization rate was 33%. The median progression-free survival was 1.9 months (95% CI 1.7–2.1 months), and the median OS was 4.6 months (95% CI 2.3–6.9 months). Treatment was generally tolerable. High baseline plasma levels of interleukin (IL)-6 and IL-8 were adversely correlated with patient survivals. <i>Conclusions:</i> The combination of thalidomide and tegafur/uracil was safe and demonstrated modest activity in patients with advanced HCC.