Loss of HOXA5 expression occurs frequently in breast cancer and correlates with higher pathological grade and poorer disease outcome. However, how HOX proteins drive differentiation in mammalian cells is poorly understood. In this paper, we investigated cellular and molecular consequences of loss of HOXA5 in breast cancer, and the role played by retinoic acid in HOXA5 function. Analysis of global gene expression data from HOXA5-depleted MCF10A breast epithelial cells, followed by validation, pointed to a role for HOXA5 in maintaining several molecular traits typical of the epithelial lineage such as cell-cell adhesion, tight junctions and markers of differentiation. Depleting HOXA5 in immortalized MCF10A or transformed MCF10A-Kras cells reduced their CD24+/CD44lo population, enhanced self-renewal capacity and reduced expression of E-cadherin (CDH1) and CD24. In the case of MCF10A-Kras, HOXA5 loss increased branching and protrusive morphology in Matrigel, all features suggestive of epithelial to basal transition. Further, orthotopically implanted xenografts of MCF10A-Kras-scr grew as well-differentiated pseudo-luminal carcinomas, while MCF10A-Kras-shHOXA5 cells formed aggressive, poorly differentiated carcinomas. Conversely, ectopic expression of HOXA5 in aggressive SUM149 or SUM159 breast cancer cells reversed the cellular and molecular alterations observed in the HOXA5-depleted cells. Retinoic acid is a known upstream regulator of HOXA5 expression. HOXA5 depletion in MCF10A cells engineered to express doxycycline-induced shHOXA5 slowed transition of cells from a less differentiated CD24-/CD44+ to the more differentiated CD24+/CD44+ state. This transition was promoted by retinal treatment, which upregulated endogenous HOXA5 expression and caused reexpression of occludin and claudin-7 (CLDN7). Expression of CDH1 and CD24 was transcriptionally upregulated by direct binding of HOXA5 to their promoter sequences as demonstrated by luciferase and ChIP analyses. Thus, loss of HOXA5 in mammary cells leads to loss of epithelial traits, an increase in stemness and cell plasticity, and the acquisition of more aggressive phenotypes.