Lymphoid enhancer factor 1 (LEF1) activity is associated with progression of several types of cancers. The role of LEF1 in progression of hepatocellular carcinoma (HCC) remains poorly known. We investigated LEF1 expression in HCC and its interactions with epithelial‐mesenchymal transition (EMT) regulators (e.g., Snail, Slug, Twist) and stemness genes (e.g., octamer‐binding transcription factor 4 [Oct4], sex determining region Y‐box 2 [Sox2], Nanog homeobox [Nanog]). Microarray analysis was performed on resected tumor samples from patients with HCC with or without postoperative recurrence. LEF1 expression was associated with postoperative recurrence as validated by immunohistochemical staining in another HCC cohort. Among 74 patients, 44 displayed a relatively high percentage of LEF1 staining (>30% of HCC cells), which was associated with a reduced recurrence‐free interval (P < 0.001) and overall survival (P = 0.009). In multivariate analysis, a high percentage of LEF1 staining was significantly associated with low albumin level (P = 0.035), Twist overexpression (P = 0.018), Snail overexpression (P = 0.064), co‐expression of Twist and Snail (P = 0.054), and multinodular tumors (P = 0.025). Down‐regulation of LEF1 by short hairpin RNA decreased tumor sphere formation, soft agar colony formation, and transwell invasiveness of HCC cell lines Mahlavu and PLC. Xenotransplant and tail vein injection experiments revealed that LEF1 down‐regulation in Mahlavu reduced tumor size and metastasis. LEF1 up‐regulation in Huh7 increased sphere formation, soft agar colony formation, and transwell invasiveness. LEF1 was shown to physically interact with and transcriptionally activate promoter regions of Oct4, Snail, Slug, and Twist. Furthermore, Oct4, Snail, and Twist transactivated LEF1 to form a regulatory positive‐feedback loop. Conclusion: LEF1 plays a pivotal role in HCC progression through transcriptional regulation of Oct4 and EMT regulators.