Objective: To investigate the relationship between inactivation of cancer suppressor gene and liver cancer stem cells (LCSC) in hepatocellular carcinoma (HCC) and the clinical significance. Methods: The protein expressions of cancer suppressor gene Merlin and LCSC surface marker in 116 specimens of HCC tissue were determined by immunohistochemical staining, and then the relations of their expressions with clinicopathologic factors and prognosis of HCC patients were analyzed. Results: According to the cut-off values of Merlin and Nanog expression levels calculated by X-tile software, in the 116 HCC patients, 92 cases (79.3%) had low Merlin expression and 24 cases (20.7%) had high Merlin expression; 36 cases (31.0%) had high Nanog expression and 80 cases (69.0%) had low Nanog expression. Univariate analysis showed that HCC tissues with poor differentiation, satellite lesions, venous invasion or hemorrhagic necrosis had low Merlin but high Nanog expression (all P<0.05). Multivariate analysis showed that low Merlin expression and high Nanog expression were independent predictors for postoperative survival and recurrence (both P<0.05). After the patients were divided into low risk group (high Merlin and low Nanog expression), medial risk group (high Merlin and high Nanog expression or low Merlin and low Nanog expression) and high risk group (low Merlin and high Nanog expression), the analysis demonstrated that both overall survival rate (low risk group>medial risk group>high risk group) and recurrence rate (low risk group