Current models of stem cell biology assume that normal and neoplastic stem cells reside at the apices of hierarchies and differentiate into nonstem progeny in a unidirectional manner. Here we identify a subpopulation of basal-like human mammary epithelial cells that departs from that assumption, spontaneously dedifferentiating into stem-like cells. Moreover, oncogenic transformation enhances the spontaneous conversion, so that nonstem cancer cells give rise to cancer stem cell (CSC)-like cells in vitro and in vivo. We further show that the differentiation state of normal cells-of-origin is a strong determinant of posttransformation behavior. These findings demonstrate that normal and CSC-like cells can arise de novo from more differentiated cell types and that hierarchical models of mammary stem cell biology should encompass bidirectional interconversions between stem and nonstem compartments. The observed plasticity may allow derivation of patient-specific adult stem cells without genetic manipulation and holds important implications for therapeutic strategies to eradicate cancer.