TNF-alpha-related-apoptosis-inducing-ligand (TRAIL) has been explored as a therapeutic drug to kill cancer cells. Cancer cells in the circulation are subjected to apoptosis-inducing factors. Despite the presence of these factors, cells are able to extravasate and metastasize. The homotypic and heterotypic cell-cell interactions in a tumor are known to play a crucial role in bestowing important characteristics to cancer cells that leave the primary site. Spheroid cell culture has been extensively used to mimic these physiologically relevant interactions. In this work, we show that the breast cancer cell lines BT20 and MCF7, cultured as 3D tumor spheroids, are more resistant to TRAIL-mediated apoptosis by downregulating the expression of death receptors (DR4 and DR5) that initiate TRAIL-mediated apoptosis. For comparison, we also investigated the effect of TRAIL on cells cultured as a 2D monolayer. Our results indicate that tumor spheroids are enriched for CD44hiCD24loALDH1hi cells, a phenotype that is predominantly known to be a marker for breast cancer stem cells. Furthermore, we attribute the TRAIL-resistance and cancer stem cell phenotype observed in tumor spheroids to the upregulation of cyclooxygenase-2 (COX-2)/prostaglandin E2 (PGE₂) pathway. We show that inhibition of the COX-2/PGE₂ pathway by treating tumor spheroids with NS-398, a selective COX-2 inhibitor, reverses the TRAIL-resistance and decreases the incidence of a CD44hiCD24lo population. Additionally, we show that siRNA mediated knockdown of COX-2 expression in MCF7 cells render them sensitive to TRAIL by increasing the expression of DR4 and DR5. Collectively, our results show the effect of the third-dimension on the response of breast cancer cells to TRAIL and suggest a therapeutic target to overcome TRAIL-resistance.