TMEPAI is a TGF-β-induced transmembrane protein that is overexpressed in several cancers. How TMEPAI expression relates to malignancy is unknown. Here we report high expression of TMEPAI in ER/PR-negative and HER2-negative breast cancer cell lines and primary breast cancers that was further increased by TGF-β treatment. Basal and TGF-β-induced expression of TMEPAI was inhibited by the TGF-β receptor antagonist SB431542 and overexpression of Smad7 or a dominant negative mutant of Alk-5. TMEPAI knockdown attenuated TGF-β-induced growth and motility in breast cancer cells, suggesting a role for TMEPAI in growth promotion and invasiveness. Further, TMEPAI knockdown decreased breast tumor mass in a mouse xenograft model in a manner associated with increased expression of PTEN and diminished phosphorylation of Akt. Consistent with effects via the PI3K pathway, tumors with TMEPAI knockdown exhibited elevated levels of the cell cycle inhibitor p27kip1 and attenuated levels of DNA replication and expression of HIF-1α and VEGF. Together, these results suggest that TMEPAI functions in breast cancer as a molecular switch that converts TGF-β from a tumor suppressive to a tumor promoting role.