Cancer initiating cells (CICs) are responsible for the unrestrained cell growth and chemoresistance of malignant tumors. Histone demethylation has been shown to be crucial for self-renewal/differentiation of stem cells, but it remains elusive whether lysine-specific demethylase 1 (LSD1) regulates the stemness properties of CICs. Here we report that the abundant expression of leucine-rich repeat-containing G-protein-coupled receptor 5 (Lgr5) is associated with the progression of hepatocellular carcinoma (HCC). Lgr5(+) HCC cells behave similarly to CICs and are highly tumorigenic and resistant to chemotherapeutic agents. Importantly, Lgr5(+) cells express higher levels of LSD1, which in turn regulates Lgr5 expression and promotes the self-renewal and drug resistance of Lgr5(+) CICs. Mechanistically, LSD1 promotes β-catenin activation by inhibiting the expression of several suppressors of β-catenin signaling, especially Prickle1 and APC in Lgr5(+) CICs, by directly regulating the levels of mono- and di-methylation of histone H3 lysine-4 at the promoters of these genes. Furthermore, LSD1-associated activation of the β-catenin signaling is essential for maintaining the activity of Lgr5(+) CICs. Together, our findings unravel the LSD1/Prickle1/APC/β-catenin signaling axis as a novel molecular circuit regulating the stemness and chemoresistance of hepatic Lgr5(+) CICs and provide potential targets to improve chemotherapeutic efficacies against HCC.