Treatment with aromatase inhibitors (AIs) has proven to be effective against estrogen receptor positive (ER⁺) breast cancer in postmenopausal women. However, resistance to AIs remains a cause of disease relapse and mortality in a significant number of breast cancer patients. Recently it has been shown by a number of studies that a rare and biologically distinct undifferentiated population of cells "tumor initiating cells" (TICs) are involved in drug resistance and tumor relapse. However, the role of TICs in hormone therapy resistance is still unclear. Several lines of evidence suggest that human epidermal growth factor receptor-2 (HER-2) regulates TICs. Previous studies from our lab indicate that resistance to AIs is mediated by up-regulation of HER-2 signaling. The purpose of the current study was to first characterize hormone resistant breast cancer cells for tumor initiating characteristics, second to determine the role of HER-2 in regulation of the TIC phenotype in hormone resistant breast cancer and finally to determine the effect of a HER-2 inhibitor and a differentiating agent alone and in combination in targeting TIC population. Our results demonstrate that resistance to AIs is associated with an increase in TIC characteristics. In addition, HER-2 regulation of hypoxia inducible factor (HIF-α) likely plays a role in activating genes involved in AI resistance and TIC characteristics, such as breast cancer resistance protein (BCRP), which confers survival benefit to TIC cells. Lastly we provide evidence that TICs in hormone resistant breast cancer can be targeted either by inhibiting HER-2 signaling or by inducing differentiation in them.