Programmed death 1 (PD-1) inhibitors are widely used for treatment of hepatocellular carcinoma (HCC). Hypothyroidism is commonly associated with this therapy, although the mechanism underlying this complication and effects on patient prognosis remain unclear. We retrospectively analysed the data of patients with HCC who received anti-PD-1 therapy at Tongji Hospital, Tongji Medical College of Huazhong University of Science and Technology between January 2018 and May 2020. Based on thyroid function evaluation, patients were categorised into hypothyroidism group and nonhypothyroidism group. Follow-up was completed on February 28, 2021. The primary endpoint of our study was progression free survival (PFS). The study included 74 patients, and the disease control rate was higher in hypothyroidism group (62.7%, 27/43) than in nonhypothyroidism group (36.4%, 11/31) (P = .020). The PFS was longer in hypothyroidism group (7.44 months) than in nonhypothyroidism group (5.68 months) (P = .006). Additionally, the PFS of patients with hypothyroidism before immunotherapy (6.27 months) was also longer than that in nonhypothyroidism group (5.68 months), although the difference was statistically nonsignificant (P = .527). Cox regression analysis showed that the hazard ratios of hypothyroidism, Child-Pugh grade B at initial admission and serum gamma-glutamyl transferase levels >71 U/L before immunotherapy were 0.404 (95% confidence interval [CI]: 0.207-0.791, P = .008), 2.753 (95%CI: 1.127-6.455, P = .026) and 2.469 (95%CI: 1.155-5.277, P = .020), respectively. Hypothyroidism was associated with prognosis in patients with HCC treated with PD-1 inhibitors, and prognosis was more favourable in patients with hypothyroidism than in those without hypothyroidism. Hypothyroidism and the Child-Pugh grade at initial admission were independently associated with patient prognosis.