Fibrolamellar carcinoma (FLC) is characterized by in-frame fusion of DnaJ heat shock protein family (Hsp40) member B1 (DNAJB1) with protein kinase cAMP-activated catalytic subunit α (PRKACA) and by dense desmoplasia. Surgery is the only effective treatment because mechanisms supporting tumor survival are unknown. We used single-cell RNA sequencing to characterize a patient-derived FLC xenograft model and identify therapeutic targets. Human FLC cells segregated into four discrete clusters that all expressed the oncogene Yes-associated protein 1 (YAP1). The two communities most enriched with cells coexpressing FLC markers [CD68, A-kinase anchoring protein 12 (AKAP12), cytokeratin 7, epithelial cell adhesion molecule (EPCAM), and carbamoyl palmitate synthase-1] also had the most cells expressing YAP1 and its proproliferative target genes (AREG and CCND1), suggesting these were proliferative FLC cell clusters. The other two clusters were enriched with cells expressing profibrotic YAP1 target genes, ACTA2, ELN, and COL1A1, indicating these were fibrogenic FLC cells. All clusters expressed the YAP1 target gene and mesothelial progenitor marker mesothelin, and many mesothelin-positive cells coexpressed albumin. Trajectory analysis predicted that the four FLC communities were derived from a single cell type transitioning among phenotypic states. After establishing a novel FLC cell line that harbored the DNAJB1-PRKACA fusion, YAP1 was inhibited, which significantly reduced expression of known YAP1 target genes as well as cell growth and migration. Thus, both FLC epithelial and stromal cells appear to arise from DNAJB1-PRKACA fusion in a YAP1-dependent liver mesothelial progenitor, identifying YAP1 as a target for FLC therapy.