Abstract: This disclosure provides data showing that LEFTY inhibits differentiation-promoting pathways such as BMP7/pSMAD5 in breast cancer cell lines, over and above its known role of inhibiting Nodal/pSMAD2. LEFTY competes with BMP7 to bind to its cell surface receptor BMPR2, leading to inhibition of pSMAD5. The LEFTY-BMPR2 interaction is dominant over BMP-BMPR2 in tumorigenic cells, resulting in diminished pSMAD status, whereas in non-tumorigenic cells, there is minimal LEFTY-BMPR2 interaction, increased BMP7-BMPR2 association, and elevated pSMAD. Compositions and methods for inducing or inhibiting expression and/or the activity of LEFTY and BMP proteins are described, which can be used in diagnosis and therapy of cancer and other conditions, and to promote proliferation of stem cells.