Breast tumors are heterogeneous and carry a small population of progenitor cells that can produce various subtypes of breast cancer. SATB2 (special AT-rich binding protein-2) is a newly identified transcription factor and epigenetic regulator. It is highly expressed in embryonic stem cells, but not in adult tissues, and regulates pluripotency-maintaining factors. However, the molecular mechanisms by which SATB2 induces transformation of human mammary epithelial cells (HMECs) leading to malignant phenotype are unknown. The main goal of this paper is to examine the molecular mechanisms by which SATB2 induces cellular transformation of HMECs into cells that are capable of self-renewal. SATB2-transformed HMECs gain the phenotype of breast progenitor cells by expressing markers of stem cells, pluripotency-maintaining factor, and epithelial to mesenchymal transition. SATB2 is highly expressed in human breast cancer cell lines, primary mammary tissues and cancer stem cells (CSCs), but not in HMECs and normal breast tissues. Chromatin Immunoprecipitation assays demonstrate that SATB2 can directly bind to promoters of Bcl-2, c-Myc, Nanog, Klf4, and XIAP, suggesting a role of SATB2 in regulation of pluripotency, cell survival and proliferation. Furthermore, inhibition of SATB2 by shRNA in breast cancer cell lines and CSCs attenuates cell proliferation and EMT phenotype. Our results suggest that SATB2 induces dedifferentiation/transformation of mature HMECs into progenitor-like cells.