Sarcopenia is prevalent in patients with hepatocellular carcinoma (HCC), and can adversely affect their outcomes. This study aims to explore the key mechanisms in the crosstalk between sarcopenia and HCC based on multi-omics profiling. A total of 136 male patients with HCC were enrolled. Sarcopenia was an independent risk factor for poor outcomes after liver transplantation (p < 0.05). Inflammatory cytokine and metabolomic profiling on these patients identified elevated plasma sTNF-R1/CHI3L1 and dysregulated lipid metabolism as related to sarcopenia and tumor recurrence risk concurrently (p < 0.05). Integrated analysis revealed close relationship between CHI3L1 and fatty acid metabolism. In mouse cachectic models by intraperitoneal injection of H22 cells, CHI3L1 was significantly elevated in the atrophic muscle tissue, as well as in circulation. In-vitro, CHI3L1 was up-regulated in muscle cells to protect itself from inflammatory damage through TNF-α/TNF-R1 signaling. CHI3L1 secreted by the muscle cells promoted the invasion of co-cultured HCC cells. Tumor tissue transcriptome data for 73 out of the 136 patients revealed that CHI3L1 may regulate fatty acid metabolism and oxidative stress. In vitro, CHI3L1 caused ROS and lipid accumulation. Targeted lipid profiling further proved that CHI3L1 was able to activate arachidonic acid metabolism, leading to lipid peroxide (LPO) accumulation. Meanwhile, LPO inhibition could compromise the remarkable pro-cancerous effects of CHI3L1. In conclusion, sarcopenia adversely affects the outcomes of liver transplantation for HCC. In sarcopenic patients, CHI3L1 was up-regulated and secreted by the skeletal muscle to protect itself through TNF-α/TNF-R1 signaling, which, in turn, can promote HCC tumor progression by inducing LPO accumulation.