Recent evidence suggests that a certain type of hepatocellular carcinoma (HCC) is hierarchically organized by a subset of cells with stem cell features (cancer stem cells; CSC). Although normal stem cells and CSCs are considered to share similar self-renewal programs, it remains unclear whether differentiation programs are also maintained in CSCs and effectively used for tumor eradication. In this study, we investigated the effect of oncostatin M (OSM), an interleukin 6–related cytokine known to induce the differentiation of hepatoblasts into hepatocytes, on liver CSCs. OSM receptor expression was detected in the majority of epithelial cell adhesion molecule–positive (EpCAM⁺) HCC with stem/progenitor cell features. OSM treatment resulted in the induction of hepatocytic differentiation of EpCAM⁺ HCC cells by inducing signal transducer and activator of transcription 3 activation, as determined by a decrease in stemness-related gene expression, a decrease in EpCAM, α-fetoprotein and cytokeratin 19 protein expressions, and an increase in albumin protein expression. OSM-treated EpCAM⁺ HCC cells showed enhanced cell proliferation with expansion of the EpCAM-negative non-CSC population. Noticeably, combination of OSM treatment with the chemotherapeutic agent 5-fluorouracil (5-FU), which eradicates EpCAM-negative non-CSCs, dramatically increased the number of apoptotic cells in vitro and suppressed tumor growth in vivo compared with either saline control, OSM, or 5-FU treatment alone. Taken together, our data suggest that OSM could be effectively used for the differentiation and active cell division of dormant EpCAM⁺ liver CSCs, and the combination of OSM and conventional chemotherapy with 5-FU efficiently eliminates HCC by targeting both CSCs and non-CSCs. Cancer Res; 70(11); 4687–97. ©2010 AACR.