Tumor cells can activate stroma, yet the implication of this activation in terms of reciprocal induction of gene expression in tumor cells is poorly understood. Epithelial Stromal Interaction 1 (EPSTI1) is an interferon response gene originally isolated from heterotypic recombinant cultures of human breast cancer cells and activated breast myofibroblasts. Here we describe the first immunolocalization of EPSTI1 in normal and cancerous breast tissue, and we provide evidence for a role of this molecule in the regulation of tumor cell properties and epithelial-mesenchymal transition. In general, no EPSTI1 staining was observed in normal breast epithelial cells from reduction mammoplasties (n=25). However, in carcinomas, staining was positive in 22 of 40 biopsies and inversely correlated with the level of differentiation. To address the function of EPSTI1, we expressed EPSTI1 ectopically in one cell line and silenced endogenous EPSTI1 by RNA interference in another. Irrespective of the experimental approach, EPSTI1 expression led to an increase in tumorsphere formation-a property associated with breast stem/progenitor cells. Most remarkably, we show that EPSTI1, by conveying spread of tumor cells, can replace peritumoral activated fibroblasts in a tumor environment assay. These observations implicate EPSTI1 as a hitherto unappreciated regulator of tumor cell properties.