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Pancreatic ductal adenocarcinoma (PDAC) shows pronounced epithelial and mesenchymal cancer cell populations 1-4 . Cellular heterogeneity in PDAC is an important feature in disease subtype specification 3-5 , but how distinct PDAC subpopulations interact, and the molecular mechanisms that underlie PDAC cell fate decisions, are incompletely understood. Here we identify the BMP inhibitor GREM1 6,7 as a key regulator of cellular heterogeneity in pancreatic cancer in human and mouse. Grem1 inactivation in established PDAC in mice resulted in a direct conversion of epithelial into mesenchymal PDAC cells within days, suggesting that persistent GREM1 activity is required to maintain the epithelial PDAC subpopulations. By contrast, Grem1 overexpression caused an almost complete 'epithelialization' of highly mesenchymal PDAC, indicating that high GREM1 activity is sufficient to revert the mesenchymal fate of PDAC cells. Mechanistically, Grem1 was highly expressed in mesenchymal PDAC cells and inhibited the expression of the epithelial-mesenchymal transition transcription factors Snai1 (also known as Snail) and Snai2 (also known as Slug) in the epithelial cell compartment, therefore restricting epithelial-mesenchymal plasticity. Thus, constant suppression of BMP activity is essential to maintain epithelial PDAC cells, indicating that the maintenance of the cellular heterogeneity of pancreatic cancer requires continuous paracrine signalling elicited by a single soluble factor., (© 2022. The Author(s), under exclusive licence to Springer Nature Limited.)