Hepatocellular carcinoma (HCC) is heterogeneous, and hepatocyte plasticity is linked to poorer patient outcomes. A subset of human HCC harboring Tuberous Sclerosis Complex 1 (TSC1) mutations exhibits more aggressive behavior. TFEB is a master regulator of lysosomal biogenesis and cell fate. We analyzed human normal and HCC tissue arrays for TFEB and CK19 expression, as well as bulk and single-cell RNA-seq datasets from mouse and human HCC, to define TFEB-associated transcriptional programs. We performed biochemical, histological, metabolomic, and transcriptomic analyses in liver-specific Tsc1 knockout (L-Tsc1 KO) and L-Tsc1,Tfeb double KO (DKO) mice. Loss of hepatic Tsc1 led to increased phosphorylation of S6 and 4EBP1, with paradoxical increases in TFEB nuclear translocation and activation. L-Tsc1 KO mice showed increased hepatocyte plasticity, decreased HFN4α, increased YAP1 activation, and spontaneous HCC with increased SOX9 and CK19-positive biliary epithelial cell (BEC)-like cells at 8-12 months. Deletion of Tfeb dampened hepatic metabolic reprogramming and hepatocyte fate changes and inhibited tumor progression in L-Tsc1 KO mice. Increased TFEB activity was associated with increased YAP and SOX9 gene expression and high-grade malignant HCC in humans. These findings indicate that loss of hepatic TSC1 leads to non-canonical TFEB activation, promoting hepatocyte plasticity and tumor heterogeneity associated with high-grade malignancy in both mouse and human HCC. .