Cancer stem cells have been proposed to be responsible for tumorigenesis and recurrence in various neoplastic diseases, including multiple myeloma (MM). We have previously reported that MM cells specifically express HLA class I at high levels and that single-chain Fv diabody against this molecule markedly induces MM cell death. Here we investigated the effect of a new diabody (C3B3) on cancer stem cell-like side population (SP) cells. SP fraction of MM cells highly expressed ABCG2 and exhibited resistance to chemotherapeutic agents; however, C3B3 induced cytotoxicity in both SP cells and main population (MP) cells to a similar extent. Moreover, C3B3 suppressed colony formation and tumorigenesis of SP cells in vitro and in vivo. Crosslinking of HLA class I by C3B3 mediated disruption of lipid rafts and actin aggregation, which led to inhibition of gene expression of β-catenin and pluripotency-associated transcription factors such as Sox2, Oct3/4 and Nanog. Conversely, knockdown of Sox2 and Oct3/4 mRNA reduced the proportion of SP cells, suggesting that these factors are essential in maintenance of SP fraction in MM cells. Thus, our findings reveal that immunotherapeutic approach by engineered antibodies can overcome drug resistance, and provide a new basis for development of cancer stem cell-targeted therapy.