Accumulating evidence has demonstrated that drug resistance can be acquired in cancer through the repopulation of tumors by cancer stem cell (CSC) expansion. Here, we investigated mechanisms driving resistance and CSC repopulation in hepatocellular carcinoma (HCC) as a cancer model using two drug-resistant, patient-derived tumor xenografts that mimicked the development of acquired resistance to sorafenib or lenvatinib treatment observed in HCC patients. RNA sequencing analysis revealed that cholesterol biosynthesis was most commonly enriched in the drug-resistant xenografts. Comparison of the genetic profiles of CD133+ stem cells and CD133- bulk cells from liver regeneration and HCC mouse models showed that the cholesterol pathway was preferentially upregulated in liver CSCs compared to normal liver stem cells. Consistently, SREBP2-mediated cholesterol biosynthesis was crucial for the augmentation of liver CSCs, and loss of SREBP2 conferred sensitivity to tyrosine kinase inhibitors, suggesting a role in regulation of acquired drug resistance in HCC. Similarly, exogenous cholesterol-treated HCC cells showed enhanced cancer stemness abilities and drug resistance. Mechanistically, caspase-3 (CASP3)-mediated cleavage of SREBP2 from the endoplasmic reticulum to promote cholesterol biosynthesis, which consequently caused resistance to sorafenib/lenvatinib treatment by driving activation of the sonic hedgehog signaling pathway. Simvastatin, an FDA-approved cholesterol-lowering drug, not only suppressed HCC tumor growth but also sensitized HCC cells to sorafenib. These findings demonstrate that CSC populations in HCC expand via CASP3-dependent, SREBP2-mediated cholesterol biosynthesis in response to tyrosine kinase inhibitor therapy and that targeting cholesterol biosynthesis can overcome acquired drug resistance.