Aim/Background: The purpose of this study was to evaluate the validity of 3 classifications for assessing liver function, the liver damage and Child-Pugh classifications and the newly proposed albumin-bilirubin (ALBI) grade, in order to examine the feasibility of evaluating hepatic function using ALBI grade with the hepatocellular carcinoma (HCC) treatment algorithm used in Japan. Methods: We analyzed the medical records of 3,495 Japanese HCC patients admitted from 2000 to 2015, which were comprised of 1,580 patients hospitalized in the Ehime Prefecture area and used as a training cohort (Ehime group), and 1,915 others who were used for validation (validation group). ALBI score used for grading ( ≤ -2.60 = grade 1, greater than -2.60 to ≤ -1.39 = grade 2, greater than -1.39 = grade 3) as well as clinical features and prognosis (Japan Integrated Staging [JIS], modified JIS, ALBI-TNM [ALBI-T] score) were retrospectively investigated. Results: For prediction of liver damage A, the values for sensitivity and specificity, positive predictive and negative predictive values, and positive and negative likelihood ratios of ALBI-1 and Child-Pugh A were similar among the 2 groups. Akaike information criterion results showed that prognosis based on ALBI grade/ALBI-T score was better than that based on liver damage/modified JIS score and Child-Pugh/JIS score (22,291.8/21,989.4, 22,379.6/22,076.0, 22,392.1/22,075.1, respectively). The cutoff values for ALBI score for indocyanine green retention rate at 15 min (ICG-R15) <10, <20, and <30% were -2.623 (area under the curve [AUC]: 0.798), -2.470 (AUC: 0.791), and -2.222 (AUC: 0.843), respectively. The distribution of ICG-R15 (<10%, 10 to <20%, 20 to <30%, and ≥ 30%) for ALBI grade 1 was similar to that for liver damage A. There were only small differences with regard to therapeutic selection with the Japanese HCC treatment algorithm between liver damage and ALBI grade. Conclusion: ALBI grade is a useful and easy classification system for assessment of hepatic function for therapeutic decision making.