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Mechanisms regulating the transition of mammary epithelial cells (MECs) to mammary stem cells (MaSCs) and to tumor-initiating cells (TICs) have not been entirely elucidated. The p53 family member, p63, is critical for mammary gland development and contains transactivation domain isoforms, which have tumor-suppressive activities, and the ΔN isoforms, which act as oncogenes. In the clinic, p63 is often used as a diagnostic marker, and further analysis of the function of TAp63 in the mammary gland is critical for improved diagnosis and patient care. Loss of TAp63 in mice leads to the formation of aggressive metastatic mammary adenocarcinoma at 9–16 months of age. Here we show that TAp63 is crucial for the transition of mammary cancer cells to TICs. When TAp63 is lost, MECs express embryonic and MaSC signatures and activate the Hippo pathway. These data indicate a crucial role for TAp63 in mammary TICs and provide a mechanism for its role as a tumor- and metastasis-suppressor in breast cancer.