Cancer stem cells (CSCs) are initiating cells in colorectal cancer (CRC). Colorectal tumours undergo epithelial to mesenchymal transition (EMT)-like processes at the invasive front, enabling invasion and metastasis, and recent studies have linked this process to the acquisition of stem cell-like properties. It is of fundamental importance to understand the molecular events leading to the establishment of cancer initiating cells and how these mechanisms relate to cellular transitions during tumourigenesis. We use an in vitro system to recapitulate changes in CRC cells at the invasive front (mesenchymal-like cells) and central mass (epithelial-like cells) of tumours. We show that the mesoderm inducer BRACHYURY is expressed in a subpopulation of CRC cells that resemble invasive front mesenchymal-like cells, where it acts to impose characteristics of CSCs in a fully reversible manner, suggesting reversible formation and modulation of such cells. BRACHYURY, itself regulated by the oncogene β-catenin, influences NANOG and other ‘stemness’ markers including a panel of markers defining CRC-CSC whose presence has been linked to poor patient prognosis. Similar regulation of NANOG through BRACHYURY was observed in other cells lines, suggesting this might be a pathway common to cancer cells undergoing mesenchymal transition. We suggest that BRACHYURY may regulate NANOG in mesenchymal-like CRC cells to impose a ‘plastic-state’, allowing competence of cells to respond to signals prompting invasion or metastasis.