Background Adaptive resistance and side effects of sorafenib treatment result in unsatisfied survival of patients with hepatocellular carcinoma (HCC). Palmitoyl-protein thioesterase 1 (PPT1) plays a critical role in progression of various cancers. However, its role on prognosis and immune infiltrates in HCC remains unclarified. Methods By data mining in the Cancer Genome Atlas databases, the role of PPT1 in HCC were initially investigated. Furthermore, HCC cell lines Hep 3B and Hep 1-6 were treated with DC661 or siRNA against PPT1. The biological function of PPT1 was determined by CCK-8 test, colony formation assay, TUNEL staining, immunofluorescence staining, Western blot test, and PI-Annexin V apoptosis assays in vitro. Animal models of subcutaneous injection were applied to investigate the therapeutic role of targeting PPT1. Results We found that PPT1 levels were significantly upregulated in HCC tissues compared with normal tissues and were significantly associated with a poor prognosis. Multivariate analysis further confirmed that high expression of PPT1 was an independent risk factor for poor overall survival of HCC patients. We initially found that PPT1 was significantly upregulated in sorafenib-resistant cell lines established in this study. Upon sorafenib treatment, HCC cells acquired adaptive resistance by inducing autophagy. We found that DC661, a selective and potent small-molecule PPT1-inhibitor, induced lysosomal membrane permeability, caused lysosomal deacidification, inhibited autophagy and enhanced sorafenib sensitivity in HCC cells. Interestingly, this sensitization effect was also mediated by the induction mitochondrial pathway apoptosis. In addition, the expression level of PPT1 was associated with the immune infiltration in the HCC tumor microenvironment, and PPT1 inhibitor DC661 significantly enhanced the anti-tumor immune response by promoting dendritic cell maturation and further promoting CD8(+) T cell activation. Moreover, DC661 combined with sorafenib was also very effective at treating tumor models in immunized mice. Conclusions Our findings suggest that targeting PPT1 with DC661 in combination with sorafenib might be a novel and effective alternative therapeutic strategy for HCC.