Levels of atonal homolog 8 (ATOH8) are reduced in 48% of hepatitis B virus-associated hepatocellular carcinoma cells (HCCs). ATOH8 downregulation is associated with loss of tumor differentiation, indicating an effect mediated by cancer stem cells. We investigated the effects of loss of ATOH8 in human hepatocellular carcinoma (HCC) cells and cell lines. HCC and adjacent nontumor tissues were collected, from 2001 through 2012, from 242 patients undergoing hepatectomy at Sun Yat-Sen University Cancer Center in China; 83% of HCCs were associated with hepatitis B virus (HBV) infection. CD133(+) cells were isolated from tumor tissues by flow cytometry. Experiments were performed in HBV-positive and HBV-negative HCC cell lines, the immortalized liver cell line LO2, and 8 other HCC cell lines. ATOH8 was expressed from lentiviral vectors in PLC8024 and Huh7 cells; levels were knocked down with small interfering RNAs in QSG7701 cells. Cells carrying empty vectors were used as controls. Gene regulation by ATOH8 was assessed in mobility shift and luciferase reporter assays. Cells were analyzed in proliferation, foci formation, and colony formation assays. The tumorigenic and chemo-resistant potential of cells were investigated by assessing growth of xenograft tumors in immunocompromised mice. Metastatic features of cells were assessed in Matrigel invasion assays and wound healing analyses. Levels of ATOH8 mRNA were reduced by more than 4-fold, compared to nontumor tissues, in 118 of 242 HCC samples (48.8%). Patients with tumor reductions in ATOH8 had significantly shorter times of disease-free survival (mean, 41.4 months) than patients with normal tissue levels (mean, 52.6 months). ATOH8 expression was reduced in HepG2, Huh7, PLC8024 and CRL8064 HCC cells, as well as CD133(+) cells isolated from human HCC samples. Transgenic expression of ATOH8 in HCC cell lines significantly reduced proliferation and foci colony formation, as well as their invasive and migratory abilities. Transgenic expression of ATOH8 reduced the ability of HBV-positive PLC8024 cells to form tumors in mice, compared to control cells. Cells with ATOH8 knockdown formed xenograft tumors more rapidly, in more mice, than control cells. ATOH8 repressed transcription of stem-cell associated genes including OCT4, NANOG, and CD133. Knockdown of ATOH8 in CD133-negative QSG7701 cells caused them to express CD133; acquire self-renewal, differentiation, chemo-resistance properties; form more xenograft tumors in mice; and generate induced pluripotent stem cells (based on staining for alkaline phosphatase and their ability to form embryoid bodies and teratomas). Alternatively, expression of ATOH8 in PLC8024 and Huh7 cells significantly reduced the numbers of cells expressing CD133, and increased the chemo-sensitivity of Huh7 cells to 5-fluorouracil (5-FU) and cisplatin, invitro and in mice. ATOH8 appears to be a tumor suppressor that induces stem-cell features and chemoresistance in HCC cells. Strategies to restore its levels and activities might be developed to treat patients with liver cancer.