Despite significant advances in surgery and biology, cancer remains a major health problem. It is now well accepted that metastasis and cancer cells' acquired or inherent resistance to conventional therapies are major roadblocks to successful treatment. Chronic inflammation is an important driving force that provides a favorable platform for cancer's progression and development and suggests a link between inflammation and metastatic transformation. However, how chronic inflammation contributes to metastatic cell transformation is not well understood. According to the current theory of cancer progression, a small subpopulation of cancer stem cells (CSCs) in tumors is responsible for their metastasis, resistance, and sustenance. Whether CSCs originate from normal stem cells or from dedifferentiation of terminally differentiated cells remains unknown. Recent evidence indicates that stem cells are not unique; malignant or nonmalignant cells can reprogram and de-differentiate to acquire a stemness phenotype. Thus, phenotypic plasticity may exist between stem cells and non-stem cells, and a dynamic equilibrium may exist between the two phenotypes. Moreover, this equilibrium may shift in one direction or another on the basis of contextual signals in the microenvironment that influence the interconversion between stem and non-stem cell compartments. Whether the inflammatory microenvironment influences this interconversion and shifts the dynamic equilibrium towards stem cell compartments remains unknown. We recently found that aberrant tissue transglutaminase (TG2) expression induces the mesenchymal transition (EMT) and stem cell characteristics in epithelial cells. This finding, in conjunction with the observation that inflammatory signals (e.g., TGFβ, TNFα, and NF-κB) which induce EMT, also induce TG2 expression, suggests a possible link between TG2, inflammation, and cancer progression. In this review, we summarize TG2-driven processes in inflammation and their implications in cancer progression.