The role of transforming growth factor-beta (TGFβ) in the progression of different molecular subtypes of breast cancer has not been clarified. Here we show that TGFβ increases breast tumour-initiating cell (BTIC) numbers but only in claudin(low) breast cancer cell lines by orchestrating a specific gene signature enriched in stem cell processes that predicts worse clinical outcome in breast cancer patients. NEDD9, a member of the Cas family of integrin scaffold proteins, is necessary to mediate these TGFβ-specific effects through a positive feedback loop that integrates TGFβ/Smad and Rho-actin-SRF-dependent signals. In normal human mammary epithelium, TGFβ induces progenitor activity only in the basal/stem cell compartment, where claudin(low) cancers are presumed to arise. These data show opposing responses to TGFβ in both breast malignant cell subtypes and normal mammary epithelial cell subpopulations and suggest therapeutic strategies for a subset of human breast cancers.