Mounting evidence has shown that side population (SP) cells are enriched for cancer stem cells (CSCs) responsible for cancer malignancy. In this study, SP technology was used to isolate a small subpopulation of SP cells in human gallbladder cancer cell line GBC-SD, and SP cells which had superior potential for proliferation in vitro and tumorigenesis in vivo were identified. Importantly, the abundance of GBC-SD SP cells was increased by a transforming growth factor-beta (TGF-beta)-induced epithelial-mesenchymal transition (EMT), and this effect was accompanied with a strong up-regulation of ABCG2 mRNA expression, and a decreased sensitivity to mitoxantrone. SP cells were restored upon the removal of TGF-beta and the reversion of the cells to an epithelial phenotype, and smad3-specific siRNA reduced SP abundance in response to TGF-beta. In conclusion, TGF-beta-induced EMT by smad-dependent signaling pathway promotes cancer development and anti-cancer drug resistant phenotype by augmenting the abundance of GBC-SD SP cells, and a better understanding of mechanisms involved in TGF-beta-induced EMT may provide a novel strategy for preventing cancer progression.