Alcohol synergistically enhances the progression of liver disease and the risk for liver cancer caused by hepatitis C virus (HCV). However, the molecular mechanism of this synergy remains unclear. Here, we provide the first evidence that Toll-like receptor 4 (TLR4) is induced by hepatocyte-specific transgenic (Tg) expression of the HCV nonstructural protein NS5A, and this induction mediates synergistic liver damage and tumor formation by alcohol-induced endotoxemia. We also identify Nanog, the stem/progenitor cell marker, as a novel downstream gene up-regulated by TLR4 activation and the presence of CD133/Nanog-positive cells in liver tumors of alcohol-fed NS5A Tg mice. Transplantation of p53-deficient hepatic progenitor cells transduced with TLR4 results in liver tumor development in mice following repetitive LPS injection, but concomitant transduction of Nanog short-hairpin RNA abrogates this outcome. Taken together, our study demonstrates a TLR4-dependent mechanism of synergistic liver disease by HCV and alcohol and an obligatory role for Nanog, a TLR4 downstream gene, in HCV-induced liver oncogenesis enhanced by alcohol.