M2-like tumor-associated macrophages (M2-TAM) played an essential part in hepatocellular carcinoma (HCC) progression. Long intergenic noncoding RNA 00161 (LINC00161), is a long non-coding RNA, that was related to HCC development. However, the relationship between LINC00161 and TAM remains indistinct. HCC cells were cocultured with an M2-like conditioned medium (M2-CM). cell counting kit-8 (CCK-8), plate cloning, cell scratch, and transwell assay evaluated cell biological activities of HCC cells. The interactions among molecules were analyzed by chromatin immunoprecipitation (CHIP), dual-luciferase reporter, and RNA immunoprecipitation (RIP). The methylation status of HECT domain and ankyrin repeat-containing, E3 ubiquitin protein ligase 1 (HACE1) was evaluated using methylation-specific PCR (MSP) and bisulfite sequencing PCR (BSP). The xenograft model was established in vivo using subcutaneous nude mice. Histological analyses were performed using hematoxylin-eosin (HE) staining. The expression of molecules was determined using immunohistochemistry (IHC), western blot and quantitative real-time PCR (qPCR). LINC00161 expression was promoted in HCC. LINC00161 knockdown significantly reduced HCC cell proliferation, migration, and invasion. Additionally, M2-TAM stimulated LINC00161 transcription and expression in HCC cells by secreting hepatocyte growth factor (HGF) to activate the Met/NFκB pathway. LINC00161 suppressed HACE1 expression, and knockdown of LINC00161 decreased the methylation on the HACE1 promoter. Meanwhile, a binding relationship between the enhancer of zeste 2 polycomb repressive complex 2 subunit (EZH2) and HACE1 was observed. LINC00161 overexpression increased the binding of EZH2 on the HACE1 promoter region. Furthermore, LINC00161 knockdown suppressed tumor growth in vivo and induced HACE1 expression by inhibiting its methylation. LINC00161, induced by M2-TAM, played a pivotal role in contributing to HCC development by recruiting EZH2 to promote the methylation of HACE1. This underscores the significant involvement of LINC00161 in mediating the progression of HCC.