The coordination between cellular differentiation and the mesenchymal/stem transition is essential for both embryo development and neoplasia, suggesting a mechanistic link between these two major processes. In this work we show that miR-127, an embryoexpressing lung miRNA, was prominently induced in lung adenocarcinoma and correlated with poor prognosis. Elevated miR-127 level drove a pronounced shift from the epithelial to the mesenchymal phenotype in cancer cells, and this shift was associated with their acquisition of stem-like traits, increased resistance to the epidermal growth factor receptor inhibitor and tumor-propagating potential. In contrast, antagonizing miR-127 markedly reversed this malignant transition, compromised the stem-like properties and the in vivo tumorigenic capability of cancer cells. Importantly, a regulatory loop involving the inflammatory signals NF-κB, miR-127 and tumor necrosis factor alpha-induced protein 3 was uncovered as a self-reinforcing circuitry that ensured an aggressive transition in lung cancer. Thus, this work identifies a novel molecular mechanism linking stemness, malignancy and inflammation, opening a new avenue for cancer treatment.