Increasing evidence suggests that lineage specific subpopulations and stem-like cells exist in normal and malignant breast tissues. Epigenetic mechanisms maintaining this hierarchical homeostasis remain to be investigated. In this study, we found the level of microRNA221 (miR-221) was higher in stem-like and myoepithelial cells than in luminal cells isolated from normal and malignant breast tissue. In normal breast cells, over-expression of miR-221 generated more myoepithelial cells whereas knock-down of miR-221 increased luminal cells. Over-expression of miR-221 stimulated stem-like cells in luminal type of cancer and the miR-221 level was correlated with clinical outcome in breast cancer patients. Epithelial-mesenchymal transition (EMT) was induced by overexpression of miR-221 in normal and breast cancer cells. The EMT related gene ATXN1 was found to be a miR-221 target gene regulating breast cell hierarchy. In conclusion, we propose that miR-221 contributes to lineage homeostasis of normal and malignant breast epithelium.