The development, progression, recurrence, and metastasis of hepatocellular carcinoma (HCC) are closely associated with an abnormal liver-regenerating microenvironment (LRM). Therefore, preventing and reversing an abnormal LRM is a potential therapeutic strategy against HCC. Studies are increasingly focusing on the impact of regeneration, fibrosis, angiogenesis, inflammation, immunomodulation, and hepatic stem cells on HCC development and progression. As a key epigenetic mechanism, DNA methylation is extensively involved in regulating physiological and pathological pathways. In this review, we summarize recent findings on the role of DNA methylation in the fibrotic, angiogenic, inflammatory/immune, and stem cell microenvironments of HCC, and discuss new advances in Traditional Chinese Medicine (TCM) on influencing the abnormal LRM, so as to gain new insights into alleviating the abnormal LRM via regulating DNA methylation by TCM.