The development and progression of hepatocellular carcinoma (HCC) are dependent on its local microenvironment. Hypoxia and inflammation are two critical factors that shape the HCC microenvironment; however, the interplay between the two factors and the involvement of cancer cells under such conditions remain poorly understood. We found that tumor‐associated macrophages, the primary proinflammatory cells within tumors, secreted more interleukin 1β (IL‐1β) under moderate hypoxic conditions due to increased stability of hypoxia inducible factor 1α (HIF‐1α). Under persistent and severe hypoxia, we found that the necrotic debris of HCC cells induced potent IL‐1β release by tumor‐associated macrophages with an M2 phenotype. We further confirmed that the necrotic debris–induced IL‐1β secretion was mediated through Toll‐like receptor 4/TIR domain–containing adapter‐inducing interferon‐β/nuclear factor kappa‐light‐chain‐enhancer of activated B cells signaling in a similar, but not identical, fashion to lipopolysaccharide‐induced inflammation. Using mass spectrometry, we identified a group of proteins with O‐linked glycosylation to be responsible for the necrotic debris–induced IL‐1β secretion. Following the increase of IL‐1β in the local microenvironment, the synthesis of HIF‐1α was up‐regulated by IL‐1β in HCC cells through cyclooxygenase‐2. The epithelial–mesenchymal transition of HCC cells was enhanced by overexpression of HIF‐1α. We further showed that IL‐1β promoted HCC metastasis in mouse models and was predictive of poor prognosis in HCC patients. Conclusion: Our findings revealed an HIF‐1α/IL‐1β signaling loop between cancer cells and tumor‐associated macrophages in a hypoxic microenvironment, resulting in cancer cell epithelial–mesenchymal transition and metastasis; more importantly, our results suggest a potential role of an anti‐inflammatory strategy in HCC treatment. (Hepatology 2018;67:1872‐1889)