Purpose To compare safety and efficacy of combined therapy with conventional transarterial chemoembolization (cTACE)+microwave ablation (MWA) versus only TACE or MWA for treatment of hepatocellular carcinoma (HCC) >3–<5 cm. Methods This randomized controlled trial (NCT04721470) screened 278 patients with HCC >3–<5 cm. Patients were randomized into three groups: 90 underwent TACE (Group 1); 95 underwent MWA (Group 2); and 93 underwent combined therapy (Group 3). Patients were followed-up with contrast-enhanced CT or MRI. Images were evaluated and compared for treatment response and adverse events based on modified response evaluation criteria in solid tumor. Serum alpha-fetoprotein (AFP) concentration was measured at baseline and during every follow-up visit. Results Final analysis included 265 patients (154 men, 111 women; mean age = 54.5 ± 11.8 years; range = 38–76 years). Complete response was achieved by 86.5% of patients who received combined therapy compared with 54.8% with only TACE and 56.5% with only MWA (p = 0.0002). The recurrence rate after 12 months was significantly lower in Group 3 (22.47%) than Groups 1 (60.7%) and 2 (51.1%) (p = 0.0001). The overall survival rate (three years after therapy) was significantly higher in Group 3 (69.6%) than Groups 1 (54.7%) and 2 (54.3%) (p = 0.02). The mean progression-free survival was significantly higher in Group 3 than groups 1 and 2 (p < 0.001). A decrease in AFP concentration was seen in 75%, 63%, and 48% patients of Group 3, 2, and 1, respectively. Conclusions Combined therapy with cTACE + MWA is safe, well-tolerated, and more effective than TACE or MWA alone for treatment of HCC >3–<5 cm.