Tumor cells with stemness (stem‐cell) features contribute to initiation and progression of hepatocellular carcinoma (HCC), but involvement of long noncoding RNAs (lncRNAs) remains largely unclear. Genome‐wide analyses were applied to identify tumor‐associated lncRNA‐DANCR. DANCR expression level and prognostic values of DANCR were assayed in two HCC cohorts (China and Korea, n = 135 and 223). Artificial modulation of DANCR (down‐ and overexpression) was done to explore the role of DANCR in tumorigenesis and colonization, and tumor‐bearing mice were used to determine therapeutic effects. We found that lncRNA‐DANCR is overexpressed in stem‐like HCC cells, and this can serve as a prognostic biomarker for HCC patients. Experiments showed that DANCR markedly increased stemness features of HCC cells to promote tumorigenesis and intra‐/extrahepatic tumor colonization. Conversely, DANCR knockdown attenuated the stem‐cell properties and in vivo interference with DANCR action led to decreased tumor cell vitality, tumor shrinkage, and improved mouse survival. Additionally, we found that the role of DANCR relied largely on an association with, and regulation of, CTNNB1. Association of DANCR with CTNNB1 blocked the repressing effect of microRNA (miR)−214, miR‐320a, and miR‐199a on CTNNB1. This observation was confirmed in vivo, suggesting a novel mechanism of tumorigenesis involving lncRNAs, messenger RNAs, and microRNAs. Conclusions: These studies reveal a significance and mechanism of DANCR action in increasing stemness features and offer a potential prognostic marker and a therapeutic target for HCC. (Hepatology 2016;63:499–511)