Background and Purpose: Hepatocellular carcinoma (HCC) ranks third in cancer-related deaths worldwide, with limited therapeutic options. While niclosamide (NIC) has shown potential for repurposing in HCC, its poor water solubility and low bioavailability limit its efficacy, and its mechanisms of action are not yet fully elucidated. This study aimed to enhance NIC’s bioavailability by developing a water-soluble prodrug salt (NIC-PS) and to elucidate its mechanisms, paving the way for clinical translation. Experimental Approach: We designed a water-soluble NIC prodrug (NIC-PS) and evaluated its efficacy through in vitro and in vivo studies, including pharmacokinetic (PK) and pharmacodynamic (PD) assays, HCC patient-derived xenograft (PDX) models were applied in two independent experiments and vasorin (VASN) knockout models. Combination treatments with NIC-PS and sorafenib or anti-PD-L1 antibody in HCC cells. Bioinformatic analyses and western blotting were used to investigate NIC-PS’s target, VASN, and related signaling pathways. Key Results: NIC-PS exhibited a ten-fold increase in oral bioavailability and reduced tumor volume by over 75% in HCC PDX models. NIC-PS directly binds and suppresses VASN, suppressing TGFβ signaling and reducing SMAD2/3 phosphorylation. VASN inhibition led to a 50% tumor reduction, and NIC-PS enhanced responses to sorafenib and anti-PD-L1 therapy. Conclusion and Implications: NIC-PS, equal to 36% of NIC in molecular weight, offers improved bioavailability, efficacy, and a novel mechanism of action in targeting VASN, showing promise for HCC treatment alone or in combination therapy.