Emerging evidence suggests that cancer is populated and maintained by tumour-initiating cells (TICs) with stem-like properties similar to those of adult tissue stem cells. Despite recent advances, the molecular regulatory mechanisms that may be shared between normal and malignant stem cells remain poorly understood. Here we show that the ΔNp63 isoform of the Trp63 transcription factor promotes normal mammary stem cell (MaSC) activity by increasing the expression of the Wnt receptor Fzd7, thereby enhancing Wnt signalling. Importantly, Fzd7-dependent enhancement of Wnt signalling by ΔNp63 also governs tumour-initiating activity of the basal subtype of breast cancer. These findings establish ΔNp63 as a key regulator of stem cells in both normal and malignant mammary tissues and provide direct evidence that breast cancer TICs and normal MaSCs share common regulatory mechanisms.