Hepatocellular carcinoma (HCC) is a slowly developing malignancy postulated to evolve from premalignant lesions in chronically damaged livers. However, it was never established that premalignant lesions actually contain tumor progenitors that give rise to cancer. Here, we describe isolation and characterization of HCC progenitor cells (HcPCs) from different mouse HCC models. Unlike fully malignant HCC, HcPCs give rise to cancer only when introduced into a liver undergoing chronic damage and compensatory proliferation. Although HcPCs exhibit a similar transcriptomic profile to bipotential hepatobiliary progenitors, the latter do not give rise to tumors. Cells resembling HcPCs reside within dysplastic lesions that appear several months before HCC nodules. Unlike early hepatocarcinogenesis, which depends on paracrine IL-6 production by inflammatory cells, due to upregulation of LIN28 expression, HcPCs had acquired autocrine IL-6 signaling that stimulates their in vivo growth and malignant progression. This may be a general mechanism that drives other IL-6-producing malignancies.