Targeting the cross-talk between tumor-initiating cells (TICs) and the niche microenvironment is an attractive avenue for cancer therapy. We show here, using a mouse model of squamous cell carcinoma, that TICs play a crucial role in creating a niche microenvironment that is required for tumor progression and drug resistance. Antioxidant activity in TICs, mediated by the transcription factor NRF2, facilitates the release of a nuclear cytokine, interleukin-33 (IL-33). This cytokine promotes differentiation of macrophages that express the high-affinity immunoglobulin E receptor Fc epsilon RI alpha and are in close proximity to TICs. In turn, these IL-33-responding Fc epsilon RI alpha(+) macrophages send paracrine transforming growth factor beta (TGF-beta) signals to TICs, inducing invasive and drug-resistant properties and further upregulating IL-33 expression. This TIC-driven, IL-33-TGF-beta feedforward loop could potentially be exploited for cancer treatment.