Approximately 50% of patients with muscle-invasive bladder cancer (MIBC) develop metastatic disease, which is almost invariably lethal. However, our understanding of pathways that drive aggressive behavior of MIBC is incomplete. Members of the FOXA subfamily of transcription factors are implicated in normal urogenital development and urologic malignancies. FOXA proteins are implicated in normal urothelial differentiation, but their role in bladder cancer is unknown. We examined FOXA expression in commonly used in vitro models of bladder cancer and in human bladder cancer specimens, and used a novel in vivo tissue recombination system to determine the functional significance of FOXA1 expression in bladder cancer. Logistic regression analysis showed decreased FOXA1 expression is associated with increasing tumor stage (p<0.001), and loss of FOXA1 is associated with high histologic grade (p<0.001). Also, we found that bladder urothelium that has undergone keratinizing squamous metaplasia, a precursor to the development of squamous cell carcinoma (SCC) exhibited loss of FOXA1 expression. Furthermore, 81% of cases of SCC of the bladder were negative for FOXA1 staining compared to only 40% of urothelial cell carcinomas. In addition, we showed that a subpopulation of FOXA1 negative urothelial tumor cells are highly proliferative. Knockdown of FOXA1 in RT4 bladder cancer cells resulted in increased expression of UPK1B, UPK2, UPK3A, and UPK3B, decreased E-cadherin expression and significantly increased cell proliferation, while overexpression of FOXA1 in T24 cells increased E-cadherin expression and significantly decreased cell growth and invasion. In vivo recombination of bladder cancer cells engineered to exhibit reduced FOXA1 expression with embryonic rat bladder mesenchyme and subsequent renal capsule engraftment resulted in enhanced tumor proliferation. These findings provide the first evidence linking loss of FOXA1 expression with histological subtypes of MIBC and urothelial cell proliferation, and suggest an important role for FOXA1 in the malignant phenotype of MIBC.