Master splicing regulator MBNL1 shapes large transcriptomic changes that drive cellular differentiation during development. Here we demonstrate that MBNL1 is a suppressor of tumor dedifferentiation. We surveyed MBNL1 expression in matched tumor/normal pairs across The Cancer Genome Atlas and found that MBNL1 was down-regulated in several common cancers. Down-regulation of MBNL1 predicted poor overall survival in breast, lung, and stomach adenocarcinomas and increased relapse and distant metastasis in triple-negative breast cancer. Down-regulation of MBNL1 led to increased tumorigenic and stem/progenitor-like properties in vitro and in vivo. A discrete set of alternative splicing events (ASEs) are shared between MBNL1-low cancers and embryonic stem cells including a MAP2K7∆exon2 splice variant that leads to increased stem/progenitor-like properties via JNK activation. Accordingly, JNK inhibition is capable of reversing MAP2K7∆exon2-driven tumor dedifferentiation in MBNL1-low cancer cells. Our work elucidates an alternative-splicing mechanism that drives tumor dedifferentiation and identifies biomarkers that predict enhanced susceptibility to JNK inhibition.