Hepatocellular carcinoma (HCC), the fourth leading cause of cancer mortality worldwide, develops almost exclusively in patients with chronic liver disease and advanced fibrosis^,. Here we interrogated functions of hepatic stellate cells (HSCs), the main source of liver fibroblasts, during hepatocarcinogenesis. Genetic depletion, activation or inhibition of HSCs in mouse models of HCC revealed their overall tumour-promoting role. HSCs were enriched in the preneoplastic environment, where they closely interacted with hepatocytes and modulated hepatocarcinogenesis by regulating hepatocyte proliferation and death. Analyses of mouse and human HSC subpopulations by single-cell RNA sequencing together with genetic ablation of subpopulation-enriched mediators revealed dual functions of HSCs in hepatocarcinogenesis. Hepatocyte growth factor, enriched in quiescent and cytokine-producing HSCs, protected against hepatocyte death and HCC development. By contrast, type I collagen, enriched in activated myofibroblastic HSCs, promoted proliferation and tumour development through increased stiffness and TAZ activation in pretumoural hepatocytes and through activation of discoidin domain receptor 1 in established tumours. An increased HSC imbalance between cytokine-producing HSCs and myofibroblastic HSCs during liver disease progression was associated with increased HCC risk in patients. In summary, the dynamic shift in HSC subpopulations and their mediators during chronic liver disease is associated with a switch from HCC protection to HCC promotion.