The activating transcription factor 3 (ATF3) gene is induced by a variety of signals, including many of those encountered by cancer cells. We present evidence that ATF3 is induced by TGFβ in the MCF10CA1a breast cancer cells and plays an integral role for TGFβ to upregulate its target genes snail, slug and twist, and to enhance cell motility. Furthermore, ATF3 upregulates the expression of the TGFb gene itself, forming a positive-feedback loop for TGFβ signaling. Functionally, ectopic expression of ATF3 leads to morphological changes and alterations of markers consistent with epithelial-to-mesenchymal transition (EMT). It also leads to features associated with breast-cancer-initiating cells: increased CD24(low)-CD44(high) population of cells, mammosphere formation and tumorigenesis. Conversely, knockdown of ATF3 reduces EMT, CD24(low)-CD44(high) cells and mammosphere formation. Importantly, knocking down twist, a downstream target, reduces the ability of ATF3 to enhance mammosphere formation, indicating the functional significance of twist in ATF3 action. To our knowledge, this is the first report demonstrating the ability of ATF3 to enhance breast cancer-initiating cell features and to feedback on TGFβ. Because ATF3 is an adaptive-response gene and is induced by various stromal signals, these findings have significant implications for how the tumor microenvironment might affect cancer development.