The identity of cancer stem cells (CSCs) remains an enigma, with the question outstanding of whether CSCs are fixed entities or plastic cell states in response to microenvironmental cues. Recent evidence highlights the power of the tumor microenvironment to dictate CSC functionality and spatiotemporal regulation that gives rise to tumor heterogeneity. This microenvironmental regulation of CSCs parallels that of normal tissues, whereby resident stem cells reside within specialized microenvironments or 'niches', which provide the cellular and molecular signals that wire every aspect of stem cell behavior and fate. The extracellular matrix (ECM), along with its sequestered growth factors, is a fundamental component of the stem cell niche. Pathological ECM remodeling is an established hallmark of cancer, with the ECM a key mediator of metastasis and drug resistance. In this review, we discuss the controversial identity of CSCs and new understanding of the impact of tumor microenvironment on CSC function and phenotype. We outline parallels between development, wound repair and cancer to discuss how changes in ECM dynamics influence stem cell function during normal physiological processes and pathological states, as well as the transition between the two in the form of precancerous lesions. We then explore examples illustrating the molecular circuits partnering cancer cells with stromal cells and how this communication involving ECM imparts a CSC phenotype and promotes chemoresistance. Understanding the mechanisms underlying CSC functionality and chemoresistance, along with mathematical modeling approaches and advancing technologies for targeting the undruggable proteome, should open opportunities for cancer breakthroughs in the future.