BackgroundNonalcoholic fatty liver disease (NAFLD) is the most common cause of chronic liver disease. The serum level of soluble CD163 (sCD163), a macrophage activation marker, is associated with liver tissue changes; however, its prognostic value is unknown. Here, we determined the utility of sCD163 as a marker for hepatocellular carcinoma (HCC) and prognostic marker for NAFLD.MethodsThis retrospective study obtained data regarding serum sCD163 levels, liver histology, and background factors associated with NAFLD in 287 patients (men/women, 140/147; average age, 53 ± 14 years) with NAFLD who underwent liver biopsy. Repeated liver biopsies of 287 patients with NAFLD (5.0 ± 2.7 years) were compared regarding serum sCD163 levels and liver tissue changes (stage, grade, steatosis, and NAFLD activity score).ResultsSerum sCD163 levels increased with the progression of liver fibrosis and inflammation (both P < 0.05) and were particularly helpful in distinguishing cases of Grade 4 fibrosis (P < 0.001). Levels of sCD163 significantly decreased in patients with NAFLD exhibiting alleviated fibrosis and inflammation (P < 0.05). We could also predict the development of HCC and associated mortality based on serum sCD163 levels at the time of NAFLD diagnosis. Serum sCD163 levels were higher in patients with HCC than in patients without HCC (1074 ± 379 ng/ml vs. 669 ± 261 ng/ml; P < 0.0001), and the same trend was observed for mortality.ConclusionsThe serum sCD163 level reflects the progression of fibrosis and inflammation in liver tissues, showing much promise as a noninvasive biomarker for nonalcoholic steatohepatitis and NAFLD as well as a possible predictor of HCC development and patient prognosis.Supplementary InformationThe online version contains supplementary material available at 10.1186/s12876-023-02786-4.