Indoleamine 2,3‐dioxygenase 1 (IDO1) is a tryptophan‐metabolizing enzyme that is widely distributed in normal or malignant tissues and contributes to immunologic tolerance and immune escape. However, in hepatocellular carcinoma (HCC), the characteristics and mechanism of IDO1 expression have not been well defined. In this study, IDO1 expression in tumor cells (T‐IDO1) was frequently detected (109/112) by immunohistochemistry in formalin‐fixed paraffin‐embedded specimens from HCC patients, and the expression patterns were mostly focal (102/109). Expression of T‐IDO1 was significantly associated with the infiltration of CD8+ T cells (P = .043), as well as younger age (<50 years old, P = .02). It was also found that IDO1 had diffuse expression in inflammatory cells in all specimens, which were defined as antigen‐presenting cells. Significant correlations among IDO1,IFNG, and CD8A transcriptional levels were observed in freshly resected HCC specimens; moreover, no constitutive IDO1 expression was detected in HCC cell lines until stimulated by interferon‐γ through the JAK2‐STAT1 signaling pathway, but not type I interferon. Survival analyses showed that increased T‐IDO1 and CD8+ T cell infiltration were significantly associated with superior overall survival (OS) (T‐IDO1, P = .003; CD8+ T cells, P = .004), and T‐IDO1 expression is an independent prognosis factor in both OS and disease‐free survival (OS, P = .007; disease‐free survival, P = .044). These findings indicated that T‐IDO1 expression in HCC is common and is dominantly driven by the host antitumor immune response, which is a favorable prognostic factor in HCC.