Cancer stem cells (CSCs) are postulated to be a small subset of tumor cells with tumor-initiating ability that shares features with normal tissue-specific stem cells. The origin of CSCs and the mechanisms underlying their genesis are poorly understood, and it is uncertain whether it is possible to obliterate CSCs without inadvertently damaging normal stem cells. Here we show that a functional reduction of eukaryotic translation initiation factor 4E (eIF4E) in Drosophila specifically eliminates CSC-like cells in the brain and ovary without having discernable effects on normal stem cells. Brain CSC-like cells can arise from dedifferentiation of transit-amplifying progenitors upon Notch hyperactivation. eIF4E is up-regulated in these dedifferentiating progenitors, where it forms a feedback regulatory loop with the growth regulator dMyc to promote cell growth, particularly nucleolar growth, and subsequent ectopic neural stem cell (NSC) formation. Cell growth regulation is also a critical component of the mechanism by which Notch signaling regulates the self-renewal of normal NSCs. Our findings highlight the importance of Notch-regulated cell growth in stem cell maintenance and reveal a stronger dependence on eIF4E function and cell growth by CSCs, which might be exploited therapeutically.