Circular RNAs (circRNAs), a class of long-time-ignored noncoding RNA, have been revealed as multifunctional RNAs in recent years. However, the diagnostic values and the mechanism of most circRNAs in hepatocellular carcinoma (HCC) remain unknown. In this study, we revealed that the expression level of hsa_circ_0005986 in HCC was significantly lower than that in adjacent non-tumorous tissues (P < 0.001). Its levels in HCC cell lines, HepG2, SMMC7721, Huh7, MHCC97L, MHCC97H, and HCCLM3 were significantly lower than those in human normal hepatic cell line L02 (P < 0.001). In addition, the low expression level of hsa_circ_0005986 was correlated with chronic hepatitis B family history (P = 0.001), tumor diameters (P < 0.001), microvascular invasion (P = 0.026), and Barcelona Clinic Liver Cancer (BCLC) stage (P < 0.001). Further experiments demonstrated that both hsa_circ_0005986 and Notch1mRNA were targets of miR-129-5p, and that hsa_circ_0005986 downregulation liberated miR-129-5p and decreased the expression level of Notch1mRNA. More importantly, hsa_circ_0005986 downregulation accelerated cell proliferation by promoting the G0/G1 to S phase transition. We conclude that hsa_circ_0005986 function as microRNA sponge in tumorigenesis and can be used as a novel biomarker for HCC.