Metformin is an oral biguanide used for type II diabetes. Epidemiologic studies suggest a link between metformin use and reduced risk of breast and other types of cancers. ErbB2-expressing breast cancer is a subgroup of tumors with poor prognosis. Previous studies demonstrated that metformin is a potent inhibitor of ErbB2-overexpressing breast cancer cells; metformin treatment extends the life span and impedes mammary tumor development in ErbB2 transgenic mice in vivo. However, the mechanisms of metformin associated antitumor activity, especially in prevention models, remain unclear. We report here for the first time that systemic administration of metformin selectively inhibits CD61(high)/CD49f(high) subpopulation, a group of tumor-initiating cells (TIC) of mouse mammary tumor virus (MMTV)-ErbB2 mammary tumors, in preneoplastic mammary glands. Metformin also inhibited CD61(high)/CD49f(high) subpopulation in MMTV-ErbB2 tumor-derived cells, which was correlated with their compromised tumor initiation/development in a syngeneic tumor graft model. Molecular analysis indicated that metformin induced downregulation of ErbB2 and EGFR expression and inhibited the phosphorylation of ErbB family members, insulin-like growth factor-1R, AKT, mTOR, and STAT3 in vivo. In vitro data indicate that low doses of metformin inhibited the self-renewal/proliferation of cancer stem cells (CSC)/TICs in ErbB2-overexpressing breast cancer cells. We further demonstrated that the expression and activation of ErbB2 were preferentially increased in CSC/TIC-enriched tumorsphere cells, which promoted their self-renewal/proliferation and rendered them more sensitive to metformin. Our results, especially the in vivo data, provide fundamental support for developing metformin-mediated preventive strategies targeting ErbB2-associated carcinogenesis.