The mechanisms regulating breast cancer differentiation state are poorly understood. Of particular interest are molecular regulators controlling the highly aggressive and poorly differentiated traits of basal-like breast carcinomas. Here we show that the Polycomb factor EZH2 maintains the differentiation state of basal-like breast cancer cells, and promotes the expression of progenitor associated and basal-lineage genes. Specifically, EZH2 regulates the composition of basal-like breast cancer cell populations by promoting a ‘bi-lineage’ differentiation state, in which cells co-express basal- and luminal-lineage markers. We show that human basal-like breast cancers contain a subpopulation of bi-lineage cells, and that EZH2-deficient cells give rise to tumors with a decreased proportion of such cells. Bi-lineage cells express genes that are active in normal luminal progenitors, and possess increased colony-formation capacity, consistent with a primitive differentiation state. We found that GATA3, a driver of luminal differentiation, performs a function opposite to EZH2, acting to suppress bi-lineage identity and luminal-progenitor gene expression. GATA3 levels increase upon EZH2 silencing, mediating a decrease in bi-lineage cell numbers. Our findings reveal a novel role for EZH2 in controlling basal-like breast cancer differentiation state and intra-tumoral cell composition.