Human sulfatase 2 (SULF2) functions as an oncoprotein in hepatocellular carcinoma (HCC) development by promoting tumor growth and metastasis via enhancement of fibroblast growth factor‐2/extracellular signal‐regulated kinase and WNT/β‐catenin signaling. Recent results implicate that SULF2 activates the transforming growth factor beta (TGFB) and Hedgehog/GLI1 pathways in HCC. OKN‐007 is a novel phenyl–sulfonyl compound that inhibits the enzymatic activity of SULF2. To investigate the antitumor effect of OKN‐007 in HCC, we treated Huh7 cells, which express high levels of SULF2, with OKN‐007 and found that it significantly promoted tumor cell apoptosis and inhibited cell proliferation, viability, and migration. To understand the action of OKN‐007 on SULF2, we used Huh7 cells which normally express SULF2 and Hep3B cells that do not normally express SULF2. Utilizing Huh7 cells transfected with short hairpin RNA targeting SULF2 and transfection of Hep3B cells with a SULF2 plasmid to enhance SULF2 expression, we showed that the antitumor activity of OKN‐007 was more pronounced in cells expressing SULF2. Furthermore, in vivo experiments verified that OKN‐007 repressed tumor growth significantly. These results identify SULF2 as an important target of the antitumor effect of OKN‐007. To determine the molecular mechanism of the antitumor effect of OKN‐007, both TGFB1/SMAD and Hedgehog/GLI1 signaling pathway activity were measured by Western blot and SMAD‐ or GLI‐reporter luciferase assays. We found that both signaling pathways were inhibited by OKN‐007. Together, these results show that OKN‐007 can suppress TGFB1/SMAD and Hedgehog/GLI1 signaling via its inhibition of SULF2 enzymatic activity. We conclude that OKN‐007 or more potent derivatives may be promising agents for the treatment of HCC. © 2012 Wiley‐Periodicals, Inc.