The role of transforming growth factor-beta (TGFβ) in the progression of different molecular subtypes of breast cancer has not been clarified. Here we show that TGFβ increases breast tumour-initiating cell (BTIC) numbers but only in claudin^low breast cancer cell lines by orchestrating a specific gene signature enriched in stem cell processes that predicts worse clinical outcome in breast cancer patients. NEDD9, a member of the Cas family of integrin scaffold proteins, is necessary to mediate these TGFβ-specific effects through a positive feedback loop that integrates TGFβ/Smad and Rho-actin-SRF-dependent signals. In normal human mammary epithelium, TGFβ induces progenitor activity only in the basal/stem cell compartment, where claudin^low cancers are presumed to arise. These data show opposing responses to TGFβ in both breast malignant cell subtypes and normal mammary epithelial cell subpopulations and suggest therapeutic strategies for a subset of human breast cancers.