Cytotoxic chemotherapy is effective in debulking tumour masses initially; however, in some patients tumours become progressively unresponsive after multiple treatment cycles. Previous studies have demonstrated that cancer stem cells (CSCs) are selectively enriched after chemotherapy through enhanced survival. Here we reveal a new mechanism by which bladder CSCs actively contribute to therapeutic resistance via an unexpected proliferative response to repopulate residual tumours between chemotherapy cycles, using human bladder cancer xenografts. Further analyses demonstrate the recruitment of a quiescent label-retaining pool of CSCs into cell division in response to chemotherapy-induced damages, similar to mobilization of normal stem cells during wound repair. While chemotherapy effectively induces apoptosis, associated prostaglandin E2 (PGE2) release paradoxically promotes neighbouring CSC repopulation. This repopulation can be abrogated by a PGE2-neutralizing antibody and celecoxib drug-mediated blockade of PGE2 signalling. In vivo administration of the cyclooxygenase-2 (COX2) inhibitor celecoxib effectively abolishes a PGE2- and COX2-mediated wound response gene signature, and attenuates progressive manifestation of chemoresistance in xenograft tumours, including primary xenografts derived from a patient who was resistant to chemotherapy. Collectively, these findings uncover a new underlying mechanism that models the progressive development of clinical chemoresistance, and implicate an adjunctive therapy to enhance chemotherapeutic response of bladder urothelial carcinomas by abrogating early tumour repopulation.