Many tumors contain heterogeneous populations of cells, only some of which exhibit increased tumorigenicity and resistance to anticancer therapies. Evidence suggests that these aggressive cancer cells, often termed “cancer stem cells” or “cancer stem-like cells” (CSCs), rely upon developmental signaling pathways that are important for survival and expansion of normal stem cells. Here we report that, in analogy to embryonic mammary epithelial biology, estrogen signaling expands the pool of functional breast CSCs through a paracrine FGF/FGFR/Tbx3 signaling pathway. Estrogen or FGF9 pretreatment induced CSC properties of breast cancer cell lines and freshly isolated breast cancer cells, whereas cotreatment of cells with tamoxifen or a small molecule inhibitor of FGFR signaling was sufficient to prevent the estrogen-induced expansion of CSCs. Furthermore, reduction of FGFR or Tbx3 gene expression was able to abrogate tumorsphere formation, whereas ectopic Tbx3 expression increased tumor seeding potential by 100-fold. These findings demonstrate that breast CSCs are stimulated by estrogen through a signaling pathway that similarly controls normal mammary epithelial stem cell biology.