Areas of a junction between two types of epithelia are known to be cancer-prone in many organ systems. However, mechanisms for preferential malignant transformation at the junction areas remain insufficiently elucidated. Here we report that inactivation of tumor suppressor genes Trp53 and Rb1 in the gastric squamous-columnar junction (SCJ) epithelium results in preferential formation of metastatic poorly differentiated neoplasms, which are similar to human gastroesophageal carcinoma. Unlike transformation-resistant antral cells, SCJ cells contain a highly proliferative pool of immature Lgr5-CD44+ cells, which are prone to transformation in organoid assays, comprise early dysplastic lesions, and constitute up to 30% of all neoplastic cells. CD44 ligand osteopontin (OPN) is preferentially expressed in and promotes organoid formation ability and transformation of the SCJ glandular epithelium. OPN and CD44 overexpression correlate with the worst prognosis of human gastroesophageal carcinoma. Thus, detection and selective targeting of the active OPN-CD44 pathway may have direct clinical relevance.