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 shorthairpin 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.