Hepatocellular carcinoma (HCC) patients suffer from a poor survival rate and a high incidence of postoperative recurrence. The hepatic microenvironment plays a significant role in the initiation, progression, and recurrence of HCC; however, the causal mechanisms of these phenomena are unclear. Given the predominant underlying fibrotic and cirrhotic conditions of the liver prone to HCC and its recurrence, alterations of components of the inflammatory milieu have been suggested as factors that promote HCC development. In particular, activated hepatic stellate cells (A-HSCs), which play a key role in liver fibrosis and cirrhosis, have been suggested as contributors to the HCC-prone microenvironment. Here, we have identified and validated an A-HSC-specific gene expression signature among nontumor tissues of 319 HCC patients that is significantly and independently associated with HCC recurrence and survival. Peritumoral, rather than tumor tissue-related, A-HSC-specific gene expression is associated with recurrence and poor survival. Analyses of A-HSC-specific gene signatures and further immunohistochemical validation in an additional 143 HCC patients have revealed that A-HSCs preferentially affect monocyte populations, shifting their gene expression from an inflammatory to an immunosuppressive signature. In addition, the interaction between A-HSCs and monocytes induces protumorigenic and progressive features of HCC cells by enhancing cell migration and tumor sphere formation. Conclusion: A-HSCs play a significant role in promoting HCC progression through interaction with and alteration of monocyte activities within the liver microenvironment; thus, disrupting the interactions and signaling events between the inflammatory milieu and components of the microenvironment may be useful therapeutic strategies for preventing HCC tumor relapse. (Hepatology 2015;62:481-495