Prevention and treatment options for hepatocellular carcinoma (HCC) are presently limited, underscoring the necessity for further elucidating molecular mechanisms underlying HCC development and identifying new prevention and therapeutic targets. Here, we demonstrate a unique protumorigenic niche in the livers of Ncoa5+/- mouse model of HCC, which is characterized by altered expression of a subset of genes including p21WAF1/CIP1 and proinflammatory cytokine genes, increased putative hepatic progenitors, and expansions of activated and tissue-resident memory (TRM) CD8+ T lymphocytes, myeloid-derived suppressor cells (MDSCs), and alternatively activated M2 macrophages. Importantly, prophylactic metformin treatment reversed these characteristics including aberrant p21WAF1/CIP1 expression and subsequently reduced HCC incidence in Ncoa5+/- male mice. Heterozygous deletion of the p21WAF1/CIP1 gene alleviated the key features associated with the protumorigenic niche in the livers of Ncoa5+/- male mice. Moreover, transcriptomic analysis reveals that preneoplastic livers of Ncoa5+/- mice are similar to the livers of nonalcoholic steatohepatitis patients as well as the adjacent noncancerous liver tissues of a subset of HCC patients with a relatively poor prognosis. Together, our results suggest that p21WAF1/CIP1 overexpression is essential in the development of protumorigenic microenvironment induced by NCOA5 deficiency and metformin prevents HCC development via alleviating p21WAF1/CIP1 overexpression and protumorigenic microenvironment.