Hepatic intercellular communication is the driving force for the progression of chronic Hepatitis B virus (CHB)-associated hepatopathologies, with the dynamic molecular mechanisms largely unknown. Combining scRNA-seq and spatial transcriptomic analysis, the kinetic landscape of the liver microenvironment across time and space in AAV-HBV mice, which develop from inflammation to ultimately hepatocellular carcinoma is generated. Kupffer cells (KCs), originally resided within the peri-portal area, are persistently recruited to the HBV-enriched peri-central region via increased CXCL9 produced by endothelial cells, facilitating the interaction between KCs and HBV⁺?hepatocytes to induce LXRα deficiency-mediated lipid metabolism disorders (LMD) in KCs. In turn, KCs with LMD elicited cancer stem cell formation from HBV⁺?hepatocytes via Stat3 pathway, activated by the chemokine network within the crosstalk. Moreover, miR-155-mediated post-transcriptional regulation and ASGR1-dependent degradation collaboratively regulated LXRα downregulation in KCs. LXRα deficiency in KCs is also detected in the tumor tissues of HBV⁺?patients compared to that of the normal and tumor-adjacent tissue. Importantly, LXRα upregulation in KCs constrained fibrosis and cancer stem cell formation. For the first time, the role of KC zonation in disease progression has been revealed, highlighting LXRα in KCs as a promising target for the early intervention in the transition from CHB-induced inflammation to cancer.