Background <p>Patient-derived organoids provide a powerful platform for elucidating mechanisms of drug resistance and tumor evolution in hepatocellular carcinoma (HCC) and identifying novel therapeutic targets.</p> Methods <p>Transcriptomic sequencing was used to compare gene expression patterns between organoid-forming and non-forming HCC tissues, as well as between sorafenib-resistant organoids and sorafenib-sensitive counterparts. The TCGA-liver hepatocellular carcinoma (LIHC) cohort was used to screen for the key molecular drivers of HCC evolution from the overlapping differentially expressed genes. The effects of D-amino acid oxidase (DAO) on the growth, migration, invasion, apoptosis, and generation of H₂O₂ were evaluated in HepG2 and SK-Hep-1 cell lines and human HCC organoids. The therapeutic efficacy of DAO against HCC growth and drug resistance was validated with xenograft mouse model and organoids, respectively.</p> Results <p>Expression level of DAO was significantly downregulated in HCC tissues that successfully formed organoids compared to those that failed, as well as in sorafenib-resistant organoids versus their parental counterparts. In the TCGA-LIHC cohort, DAO expression was significantly reduced in advanced-stage HCC tissues and was inversely correlated with stemness- and epithelial-mesenchymal transition (EMT)-related molecules. Lower DAO expression was associated with poor overall survival in patients with HCC. In HepG2 cells, DAO knockdown significantly enhanced cell proliferation. Ectopic DAO expression suppressed proliferation, migration, and invasion in HepG2 and SK-Hep-1 cells. D-alanine (D-Ala) supplementation further enhanced the anti-proliferative effect of overexpressed DAO, but did not significantly alter the DAO-mediated suppression of migration or invasion. Ectopic expression of DAO induced apoptosis <i>via</i> the generation of H₂O₂ upon simultaneous supplementation of D-Ala into the culture medium; the addition of catalase, an H₂O₂-degrading enzyme, significantly reversed the D-Ala-induced effects. In BALB/c nude mouse models, HCC cells overexpressing DAO formed significantly smaller tumors than the control cells (<i>P</i> = 0.010), and this tumor-suppressive effect was further enhanced by D-alanine supplementation. Ectopic DAO expression restored sorafenib sensitivity in resistant organoids.</p> Conclusion <p>DAO appears to be a novel endogenous stemness repressor. The reduction in DAO is a critical molecular event in the evolution of HCC. Therapeutically, combined DAO and D-amino acid supplementation is a promising strategy for HCC treatment, particularly for reversing sorafenib resistance.</p>