The short splice variant of the basic helix-loop-helix Per-Arnt-Sim transcription factor Singleminded-2, SIM2s, has been implicated in development and is frequently lost or reduced in primary breast tumors. Here, we show that loss of Sim2s causes aberrant mouse mammary gland ductal development with features suggestive of malignant transformation, including increased proliferation, loss of polarity, down-regulation of E-cadherin, and invasion of the surrounding stroma. Additionally, knockdown of SIM2s in MCF-7 breast cancer cells contributed to an epithelial-mesenchymal transition (EMT) and increased tumorigenesis. In both Sim2^−/− mammary glands and SIM2s-depleted MCF7 cells, these changes were associated with increased SLUG and MMP2 levels. SIM2s protein was detectable on the SLUG promoter, and overexpression of SIM2s repressed expression from a SLUG-controlled reporter in a dose-dependent manner. To our knowledge, SIM2s is the first protein shown to bind and repress the SLUG promoter, providing a plausible explanation for the development role and breast tumor-suppressive activity of SIM2s. Together, our results suggest that SIM2s is a key regulator of mammary-ductal development and that loss of SIM2s expression is associated with an invasive, EMT-like phenotype.