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Background The Th1 cell-specific transcription factor TBX21 functions as a regulator of expression of a Th1 cytokine, interferon gamma (IFN-γ). However, the specific function of TBX21 correlated with cancer stemness remains unclear. Methods Using univariate and multivariate survival analysis, TBX21was identified as an independent predictive factor and was associated with poor prognosis in 1389 patients with lung adenocarcinoma (LUAD). Its mechanism in the prognosis was explored by functional enrichment analysis and validated in bioexperiments. Results In the training and test sets, TBX21 could classify 1389 LUAD patients into high and low-risk groups with significantly different prognosis (P < 0.01). Its prognostic power was independent of other clinical factors including stage, age, gender and smoking status. Functional studies indicated that downregulating TBX21 in lung cancer cells decreased the fraction of cancer stem cells and their sphere and tumor initiation frequency. Furthermore, the study showed that TBX21 activation transduced a TBX21–IL-4 signaling cascade to promote tumor initiation, tumor growth and expression of stemness markers. Conclusions These data demonstrated a key role of TBX21 in the maintenance of cancer stemness and that the TBX21–IL-4 pathway is a crucial factor contributing to lung carcinogenesis. Graphical abstract TBX21 prognostic model correlated with cancer stemness via TBX21-IL-4 pathway in LUAD patients Electronic supplementary material The online version of this article (10.1186/s13287-018-0820-6) contains supplementary material, which is available to authorized users.