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Dachshund family transcription factor 1 (DACH1) has been shown to exhibit a tumour‐suppressive role in a number of human cancers. However, the role of DACH1 in hypopharyngeal squamous cell carcinoma (HPSCC) and its function in the tumour microenvironment (TME) are still not clear. Crosstalk between cancer cells and tumour‐associated macrophages (TAMs) mediates tumour progression in HPSCC. The expression of DACH1, CD86 and CD163 was detected in 71 matched HPSCC–non‐cancerous tissue pairs using quantitative real‐time polymerase chain reaction and IHC analysis. Cell proliferation, migration and invasion were monitored by colony formation, Transwell and EdU incorporation assays. ChIP‐qPCR and dual‐luciferase reporter assays were applied to verify the targeting relationships between DACH1 and IGF‐1. Stably transfected HPSCC cells were co‐cultured with MΦ macrophages to assess macrophage polarization and secretory signals. DACH1 was decreased in HPSCC tissues and was indicative of a poor prognosis for HPSCC patients. Decreased DACH1 expression in HPSCC was associated with fewer CD86+ TAMs and more CD163+ TAMs. Knockdown of DACH1 inhibited the proliferation, migration and invasion of FaDu cells via Akt/NF‐κB/MMP2/9 signalling. Additionally, DACH1 was found to directly bind to the promoter region of IGF‐1 to downregulate the secretion of IGF‐1, which inhibited TAMs polarization through the IGF‐1R/JAK1/STAT3 axis. Furthermore, in nude mice, the effects of DACH1 inhibition on tumour progression and M2‐like TAMs polarization were confirmed. These findings suggest that IGF‐1 is a critical downstream effector of DACH1 that suppresses cell migration and invasion and inhibits TAMs polarization. DACH1 could be a therapeutic target and prognostic marker for HPSCC. [ABSTRACT FROM AUTHOR]