Dysregulated bile acids (BAs) are closely associated with liver diseases and attributed to altered gut microbiota. Here, we show that the intrahepatic retention of hydrophobic BAs including deoxycholate (DCA), taurocholate (TCA), taurochenodeoxycholate (TCDCA), and taurolithocholate (TLCA) were substantially increased in a streptozotocin and high fat diet (HFD) induced nonalcoholic steatohepatitis‐hepatocellular carcinoma (NASH‐HCC) mouse model. Additionally chronic HFD‐fed mice spontaneously developed liver tumors with significantly increased hepatic BA levels. Enhancing intestinal excretion of hydrophobic BAs in the NASH‐HCC model mice by a 2% cholestyramine feeding significantly prevented HCC development. The gut microbiota alterations were closely correlated with altered BA levels in liver and feces. HFD‐induced inflammation inhibited key BA transporters, resulting in sustained increases in intrahepatic BA concentrations. Our study also showed a significantly increased cell proliferation in BA treated normal human hepatic cell lines and a down‐regulated expression of tumor suppressor gene CEBPα in TCDCA treated HepG2 cell line, suggesting that several hydrophobic BAs may collaboratively promote liver carcinogenesis. What's new? Dysregulated bile acids (BAs), which are attributed to altered gut microbiota, are closely associated with liver diseases, but the underlying mechanism remains unclear. Here, the authors show in a mouse model that high fat diet‐induced liver carcinogenesis is mediated by altered gut microbiota which causes sustained retention of high concentrations of hepatic BAs. Enhancing the intestinal excretion of hydrophobic and thus cytotoxic BAs significantly prevents hepatocellular carcinoma development. Altogether, the findings suggest that several hydrophobic BAs may collaboratively promote liver carcinogenesis and highlight efforts to regain BA homeostasis as a potentially attractive therapeutic strategy.