We previously demonstrated that RARα2 expression is increased in CD138 selected plasma cells of relapsed multiple myelomas (MMs), and increased expression was linked to poor prognosis in newly diagnosed MM patients. In the present study, we demonstrate that increased RARα2 confers myeloma stem cell features. Higher expression of RARα2 was identified in the multiple myeloma stem cell (MMSC) fraction. Overexpression of RARα2 in bulk MM cell lines resulted in: 1) increased drug resistance; 2) increased clonogenic potential; 3) activation of both Wnt and Hedgehog (Hh) pathways; 4) increased side population and aldehyde dehydrogenase levels; and 5) increased expression of embryonic stem cell genes. The opposite effects were seen with RARα2 knockdown. We demonstrate that RARα2 induces drug resistance by activating the drug efflux pump gene ABCC3 and anti-apoptotic Bcl-2 family members. Inhibition of Wnt signaling or ABCC3 function could overcome drug resistance in RARα2 overexpressing MM cells. We also showed that in the 5TGM1 mouse model, targeting of the Wnt and Hh pathways using CAY10404, cyclopamine, or itraconazole significantly reduced the myeloma tumor burden and increased survival. Targeting RARα2 or its downstream signaling pathways provides a potential strategy to eliminate MMSC.