Cell-in-cell structures (CICs) refer to a type of unique structure with one or more cells within another one, whose biological outcomes are poorly understood. The present study aims to investigate the effects of CICs formation on tumor progression. Using genetically marked hepatocellular cancer cell lines, we explored the possibility that tumor cells might acquire genetic information and malignant phenotypes from parental cells undergoing CICs formation. The present study showed that the derivatives, isolated from CICs formed between two subpopulations by flow cytometry sorting, were found to inherit aggressive features from the parental cells, manifested with increased abilities in both proliferation and invasiveness. Consistently, the CICs clones expressed a lower level of E-cadherin and a higher level of Vimentin, ZEB-1, Fibronectin, MMP9, MMP2 and Snail as compared with the parental cells, indicating epithelial-mesenchymal transition. Remarkably, the new derivatives exhibited significantly enhanced tumorigenicity in the xenograft mouse models. Moreover, whole exome sequencing analysis identified a group of potential genes which were involved in CIC-mediated genetic transfer. These results are consistent with a role of genetic transfer by CICs formation in genomic instability and malignancy of tumor cells, which suggest that the formation of CICs may promote genetic transfer and gain of malignancy during tumor progression.