Until now the essential transcription factor that determines the epithelial phenotype of breast cancer has not been identified and its role in epithelial-to-mesenchymal transition (EMT) and tumor progression remain unclear. Here, by analyzing large expression profiles of human breast cancer cells, we found an extraordinary correlation between the expression of Grainyhead transcription factor Grhl2 and epithelial marker E-cadherin. Knockdown of Grhl2 expression by shRNA in human mammary epithelial cell MCF10A leads to down-regulation of E-cadherin and EMT. Grhl2 is down-regulated in disseminated cancer cells that have undergone EMT, and over-expression of Grhl2 is sufficient to induce epithelial gene expression. Large clinical datasets reveal that expression of Grhl2 is significantly associated with poor relapse free survival and increased risk of metastasis in breast cancer patients. In mouse models, over-expression of Grhl2 significantly promotes tumor growth and metastasis. Further testing of several Grhl2 regulated genes leads to the same conclusions that the tumorigenic and metastatic potentials of tumor cells are linked to epithelial phenotype but not mesenchymal phenotype. In conclusion, our findings indicate that Grhl2 plays an essential role in the determination of epithelial phenotype of breast cancers, EMT and tumor progression.