In several organ systems, the transitional zone between different types of epithelium is a hotspot for pre-neoplastic metaplasia and malignancy, but the cells of origin for these metaplastic epithelia and subsequent malignancies remain unknown. In the case of Barrett's oesophagus, intestinal metaplasia occurs at the gastro-oesophageal junction, where stratified squamous epithelium transitions into simple columnar cells. On the basis of a number of experimental models, several alternative cell types have been proposed as the source of this metaplasia but in all cases the evidence is inconclusive: no model completely mimics Barrett's oesophagus in terms of the presence of intestinal goblet cells. Here we describe a transitional columnar epithelium with distinct basal progenitor cells (p63+KRT5+KRT7+) at the squamous-columnar junction of the upper gastrointestinal tract in a mouse model. We use multiple models and lineage tracing strategies to show that this squamous-columnar junction basal cell population serves as a source of progenitors for the transitional epithelium. On ectopic expression of CDX2, these transitional basal progenitors differentiate into intestinal-like epithelium (including goblet cells) and thereby reproduce Barrett's metaplasia. A similar transitional columnar epithelium is present at the transitional zones of other mouse tissues (including the anorectal junction) as well as in the gastro-oesophageal junction in the human gut. Acid reflux-induced oesophagitis and the multilayered epithelium (believed to be a precursor of Barrett's oesophagus) are both characterized by the expansion of the transitional basal progenitor cells. Our findings reveal a previously unidentified transitional zone in the epithelium of the upper gastrointestinal tract and provide evidence that the p63+KRT5+KRT7+ basal cells in this zone are the cells of origin for multi-layered epithelium and Barrett's oesophagus.