Hepatocellular carcinoma is an emerging worldwide health threat that has few curative treatment options and poor overall survival. Progressive hepatic fibrosis is a common pathway for all forms of chronic liver disease and is closely linked epidemiologically to hepatocellular carcinoma risk. However, the molecular events that predispose a fibrotic liver to cancer development remain elusive. Nonetheless, a permissive hepatic microenvironment provides fertile soil for transition of damaged hepatocytes into hepatocellular carcinoma. Key predisposing features include alterations in the extracellular matrix, bidirectional signaling pathways between parenchymal and nonparenchymal cells, and immune dysfunction. Emerging research into the contributions of autophagy, tumor-associated fibroblasts, and hepatocellular carcinoma progenitor cells to this dangerous milieu also provides new mechanistic underpinnings to explain the contribution of fibrosis to cancer. As effective antifibrotic therapies are developed, these approaches could attenuate the rising surge of hepatocellular carcinoma associated with chronic liver disease.