Arsenic is a well-known human carcinogen. However, the mechanisms underlying arsenic-induced carcinogenesis remain elusive. Here we show that chronic and low level of arsenic stress induces transformation of the human bronchial epithelial cells, BEAS-2B, and that some of the transformed cells show characteristics of cancer stem-like cells (CSCs). Meanwhile, we demonstrate that arsenic stress dedifferentiates CD61⁺ BEAS-2B cells into CSC-like CD61^- cells featured with noncanonical epithelial-mesenchymal transition (EMT), enhanced chemoresistance, and metastasis. Finally, we show that oncogene c-Myc expression is associated with arsenic-induced tumor initiation and progression. Altogether, our findings highlight a unique mechanism of arsenic-induced transformation of human bronchial epithelial cells and provide a novel therapeutic target for arsenic-initiated lung cancer.