During the progression of malignant peritoneal mesothelioma (MPeM), tumor nodules propagate diffusely within the abdomen and tumors are characterized by distinct phenotypic sub-types. Recent studies in solid organ cancers have shown that cancer stem cells (CSCs) play a pivotal role in the initiation and progression of tumors. However, it is not known whether tumorigenic stem cells exist and whether they promote tumor growth in MPeM. In this study, we developed and characterized a CSC model for MPeM using stably expandable tumorigenic stem cells derived from patient tumors. We found morphologically distinct populations of CSCs that divide asymmetrically or symmetrically in MPeM in vitro cell culture. The MPeM stem cells (MPeMSCs) express stem cell markers c-MYC, NES and VEGFR2 and in the presence of matrix components cells form colony spheres. MPeMSCs are multipotent, differentiate into neuronal, vascular and adipose progeny upon defined induction and the differentiating cells express lineage-specific markers such as TUBB3, an early neuronal marker; vWF, VEGFA, VEGFC and IL-8, endothelial markers; and PPARγ and FABP4, adipose markers. Xenotransplantation experiments using MPeMSCs demonstrated early tumor growth compared with parental cells. Limiting dilution experiments using MPeMSCs and endothelial lineage-induced cells derived from a single MPeMSC resulted in early tumor growth in the latter group indicating that endothelial differentiation of MPeMSCs is important for MPeM tumor initiation. Our observation that the MPeM tumors contain stem cells with tumorigenic potential has important implications for understanding the cells of origin and tumor progression in MPeM and hence targeting CSCs may be a useful strategy to inhibit malignant progression.