Cancer is often viewed as a caricature of normal developmental processes, but the extent to which its cellular heterogeneity truly recapitulates multilineage differentiation processes of normal tissues remains unknown. Here we implement single-cell PCR gene-expression analysis to dissect the cellular composition of primary human normal colon and colon cancer epithelia. We show that human colon cancer tissues contain distinct cell populations whose transcriptional identities mirror those of the different cellular lineages of normal colon. By creating monoclonal tumor xenografts from injection of a single (n = 1) cell, we demonstrate that the transcriptional diversity of cancer tissues is largely explained by in vivo multilineage differentiation and not only by clonal genetic heterogeneity. Finally, we show that the different gene-expression programs linked to multilineage differentiation are strongly associated with patient survival. We develop two-gene classifier systems (KRT20 versus CA1, MS4A12, CD177, SLC26A3) that predict clinical outcomes with hazard ratios superior to those of pathological grade and comparable to those of microarray-derived multigene expression signatures.