BACKGROUND: Immunotherapy combinations have revolutionised the therapeutic landscape of advanced hepatocellular carcinoma (HCC), but not all yield a significant overall survival benefit, underscoring the need for novel effective agents. Anlotinib plus penpulimab has demonstrated encouraging activity and safety in a phase 2 study. In this phase 3 trial, we aimed to assess whether the combination of anlotinib plus penpulimab improved survival versus sorafenib in patients with unresectable HCC. METHODS: APOLLO was a multicentre, open-label, parallel-controlled, randomised, phase 3 trial conducted at 79 centres in China. Patients aged 18-75 years with unresectable HCC, no previous systemic therapy, and an Eastern Cooperative Oncology Group (ECOG) performance status of 0 or 1 were randomly assigned (2:1) to anlotinib (10 mg orally once daily on days 1-14) plus penpulimab (200 mg intravenously on day 1), or sorafenib (400 mg orally twice daily) every 3 weeks. Randomisation was done centrally using block randomisation with a fixed block size of 3 and stratified by the presence of macrovascular invasion or extrahepatic metastasis, α-fetoprotein concentration, and ECOG performance status. Sex (male or female) and ethnicity (Chinese or other) were self-reported. The co-primary endpoints were progression-free survival assessed by masked independent review committee and overall survival in the intention-to-treat population. Safety was assessed in all participants who received at least one dose of the study drug and had at least one recorded safety assessment. Final progression-free survival and second interim overall survival analyses are presented. This trial is registered at ClinicalTrials.gov, NCT04344158, and follow-up is ongoing. FINDINGS: From Aug 11, 2020, to June 20, 2023, 940 patients were screened for inclusion in the trial, 291 were excluded, and 649 were randomly assigned to an intervention (433 were assigned to the anlotinib plus penpulimab group and 216 were assigned to the sorafenib group. 551 (85%) of the 649 patients were male and 98 (15%) were female. All patients were Chinese with a median age of 57 years (IQR 50-65). For the final analysis of progression-free survival (June 5, 2023), 636 patients (424 patients in the anlotinib plus penpulimab group vs 212 patients in the sorafenib group) comprised the intention-to-treat population. For the second interim analysis of overall survival (Jan 29, 2024), 649 patients (433 vs 216) comprised the intention-to-treat population. Median follow-up was 6·2 months (IQR 5·5-7·5) for the anlotinib plus penpulimab group and 4·2 months (2·9-7·1) for the sorafenib group for final progression-free survival analysis, and 15·3 months (14·3-17·3) for the anlotinib plus penpulimab group and 14·5 months (11·5-17·0) for the sorafenib group for the second interim overall survival analysis. Median progression-free survival was significantly extended with anlotinib plus penpulimab versus sorafenib (6·9 months [95% CI 5·8-8·0] vs 2·8 months [2·7-4·1]; hazard ratio [HR] 0·52 [95% CI 0·41-0·66]; p<0·0001). Median overall survival was significantly prolonged with anlotinib plus penpulimab compared with sorafenib (16·5 months [95% CI 14·7-19·0] vs 13·2 months [9·7-16·9]; HR 0·69 [95% CI 0·55-0·87]; p=0·0014). The most common grade 3 or worse treatment-related adverse events were hypertension (75 [17%] patients in the anlotinib plus penpulimab group vs 22 [10%] in the sorafenib group) and decrease in platelet count (39 [9%] vs 13 [6%]). Treatment-related serious adverse events occurred in 90 (21%) and 19 (9%) patients in the respective groups; treatment-related deaths occurred in one (<1%) patient in the anlotinib plus penpulimab group (upper gastrointestinal haemorrhage) and two (1%) patients in the sorafenib group (hepatic failure and death of unknown cause). INTERPRETATION: Anlotinib plus penpulimab significantly improved progression-free survival and overall survival versus sorafenib in unresectable HCC and might be a new first-line option. These findings require verification in other regions of the world. FUNDING: Chia Tai Tianqing Pharmaceutical Group.