STUDY QUESTION: Is endometriosis associated with abnormally located endometrial basalis-like (SSEA1+/SOX9+) cells in the secretory phase functionalis and could they contribute to ectopic endometriotic lesion formation? SUMMARY ANSWER: Women with endometriosis had an abnormally higher number of basalis-like SSEA1+/SOX9+ epithelial cells present in the stratum functionalis and, since these cells formed 3D structures in vitro with phenotypic similarities to ectopic endometriotic lesions, they may generate ectopic lesions following retrograde menstruation. WHAT IS KNOWN ALREADY: Endometrial basalis cells with progenitor potential are postulated to play a role in the pathogenesis of endometriosis and SSEA1 and nuclear SOX9 (nSOX9) mark basalis epithelial cells that also have some adenogenic properties in vitro. Induction of ectopic endometriotic lesions in a baboon model of endometriosis produces characteristic changes in the eutopic endometrium. Retrograde menstruation of endometrial basalis cells is proposed to play a role in the pathogenesis of endometriosis. STUDY DESIGN, SIZE, DURATION: This prospective study included endometrial samples from 102 women with and without endometriosis undergoing gynaecological surgery and from six baboons before and after induction of endometriosis, with in vitro assays examining the differentiation potential of human basalis-like cells. PARTICIPANTS/MATERIALS, SETTING, METHODS: The study was conducted at a University Research Institute. SSEA1 and SOX9 expression levels were examined in human endometrial samples from women aged 18-55 years (by immunohistochemistry (IHC) and qPCR) and from baboons (IHC). The differential gene expression and differentiation potential was assessed in freshly isolated SSEA1+ endometrial epithelial cells from women with and without endometriosis (n = 8/group) in vitro. In silico analysis of selected published microarray datasets identified differential regulation of genes of interest for the mid-secretory phase endometrium of women with endometriosis relative to that of healthy women without endometriosis. MAIN RESULTS AND THE ROLE OF CHANCE: Women with endometriosis demonstrated higher number of basalis-like cells (SSEA1+, nSOX9+) in the functionalis layer of the eutopic endometrium compared with the healthy women without endometriosis in the secretory phase of the cycle (P < 0.05). Induction of endometriosis resulted in a similar increase in basalis-like epithelial cells in the eutopic baboon endometrium. The isolated SSEA1+ epithelial cells from the eutopic endometrium of women with endometriosis had higher expression of OCT4, NANOG, FUT4 mRNA (P = 0.05, P = 0.007, P = 0.018, respectively) and they differentiated into ectopic endometriotic gland-like structures in 3D culture, but not into mesodermal lineages (adipose or bone cells). LARGE SCALE DATA: N/A. LIMITATIONS, REASONS FOR CAUTION: Small sample size. Bioinformatics analysis and results depends on the quality of published microarray datasets and the stringency of patient selection criteria employed. Differentiation of SSEA-1+ cells was only examined for two mesodermal lineages (adipogenic and osteogenic). WIDER IMPLICATIONS OF THE FINDINGS: Since endometrial epithelial cells with SSEA1+/nSOX9+ basalis-like phenotype generate endometriotic gland-like structures in vitro, they may potentially be a therapeutic target for endometriosis. An in depth analysis of the function of basalis-like eutopic endometrial epithelial cells might provide insights into their potential deregulation in other disorders of the endometrium including heavy menstrual bleeding and endometrial cancer where their function may be aberrant. STUDY FUNDING/COMPETING INTEREST(S): We acknowledge the support by Wellbeing of Women project grant RG1073 (D.K.H., C.E.G.) and R01 HD083273 from the National Institutes of Health (A.T.F.). We also acknowledge the support of Liverpool Women's Hospital Foundation Trust (J.D.), Institute of Translational Medicine (L.D.S., H.A.L., A.J.V., D.K.H.), University of Liverpool, the National Health and Medical Research Council of Australia ID 1042298 (C.E.G.) and the Victorian Government Operational Infrastructure Support Fund. All authors declare no conflict of interest.