tRNA-derived fragments (tRFs), a novel class of small non-coding RNAs cleaved from transfer RNAs, have been implicated in tumor regulation. In this study, the role of a specific tRF, HCETSR is investigated, which is significantly downregulated in hepatocellular carcinoma (HCC) and correlates with advanced tumor burden and higher HCC mortality. Functional analyses revealed that HCETSR inhibits HCC malignancy and serves as an independent predictor of poor prognosis. Mechanistically, a novel SPTBN1/catenin complex axis regulated by HCETSR is identified. HCETSR binds to a critical domain of SPTBN1, disrupting its interaction with the catenin complex (comprising β-catenin, α-catenin, and P120-catenin), and facilitates the transfer of the catenin complex from the cell membrane to the nucleus. Specifically, HCETSR decreases the proteasomal degradation of β-catenin and inhibits the synthesis of nascent β-catenin. Furthermore, HCETSR suppresses the transcriptional activity of LEF1 through P120-catenin rather than α-catenin, thereby reducing β-catenin's influence on LEF1 activity. It is demonstrated that HCETSR is spliced from tRNA-Glu/TTC. The biogenesis of HCETSR and tRNA-Glu/TTC is regulated by the spliceosome and Dicer1. In conclusion, These findings suggest that HCETSR, derived from tRNA-Glu/TTC, inhibits HCC malignancy via modulation of the SPTBN1/catenin axis and may represent a promising prognostic marker and therapeutic strategy for HCC.