Hepatocellular carcinoma (HCC) occurs in fibrotic liver as a consequence of underlying cirrhosis. The goal of this study was to investigate how the interaction between HCC cells and stromal fibroblasts affects tumor progression. We isolated and characterized carcinoma-associated fibroblasts (CAFs) and paired peritumoral tissue fibroblasts (PTFs) from 10 different patients with HCC and performed coculture experiments. We demonstrated a paracrine mechanism whereby HCC cells secrete lysophostatidic acid (LPA), which promotes transdifferentiation of PTFs to a CAF-like myofibroblastic phenotype. This effect is mediated by up-regulation of specific genes related to a myo/contractile phenotype. After transdifferentiation, PTFs expressed a-smooth muscle actin (a-SMA) and enhanced proliferation, migration, and invasion of HCC cells occur. A pan-LPA inhibitor (a-bromomethylene phosphonate [BrP]-LPA ), or autotaxin gene silencing, inhibited this PTF transdifferentiation and the consequent enhanced proliferation, migration, and invasion of HCC cells. In vivo, PTFs coinjected with HCC cells underwent transdifferentiation and promoted tumor progression. Treatment with BrP-LPA blocked transdifferentiation of PTFs, downregulated myofibroblast-related genes, and slowed HCC growth and progression. Patients with larger and metastatic HCC and shorter survival displayed higher serum levels of LPA. Analysis of microdissected tissues indicated that stroma is the main target of the LPA paracrine loop in HCC. As a consequence, a-SMA-positive cells were more widespread in tumoral compared with paired peritumoral stroma. Conclusion: Our data indicate that LPA accelerates HCC progression by recruiting PTFs and promoting their transdifferentiation into myofibroblasts. Inhibition of LPA could prove effective in blocking transdifferentiation of myofibroblasts and tumor progression. (HEPATOLOGY 2011;54:920-930) I n Western countries, hepatocellular carcinoma (HCC) develops in patients with liver cirrhosis and is the final stage of a disease that can last for many years. It is generally accepted that HCC originates from hepatocytes but grows and advances while fully embedded in a surrounding microenvironment