Cancer stem cells (CSCs) have been identified in various types of cancer; however, the mechanisms by which cells acquire CSC properties such as drug resistance and tumour seeding ability are not fully understood. Here, we identified microRNA-27b (miR-27b) as a key regulator for the generation of a side-population in breast cancer cells that showed CSC properties, and also found that the anti-type II diabetes (T2D) drug metformin reduced this side-population via miR-27b-mediated repression of ectonucleotide pyrophosphatase/phosphodiesterase family member 1 (ENPP1), which is involved in T2D development. ENPP1 induced the generation of the side-population via upregulation of the ABCG2 transporter. ENPP1 was also identified as a substrate of the 26S proteasome, the activity of which is downregulated in CSCs. Overall, these results demonstrate that a T2D-associated gene plays an important role in tumour development and that its expression is strictly controlled at the mRNA and protein levels.