Abstract The Epithelial-Mesenchymal Transition (EMT) and Cancer Stem Cell (CSC) formation are two paramount processes driving tumor progression, therapy resistance and cancer metastasis. Some recent experiments show that cells with varying EMT and CSC phenotypes are spatially segregated in the primary tumor. The underlying mechanisms generating such spatiotemporal dynamics and heterogeneity in the tumor micro-environment, however, remain largely unexplored. Here, we show through a mechanism-based dynamical model that the diffusion of EMT-inducing signals such as TGF-β in a tumor tissue, together with non-cell autonomous control of EMT and CSC decision-making via juxtacrine signaling mediated via the Notch signaling pathway, can explain experimentally observed disparate localization of subsets of CSCs with varying EMT states in the tumor. Our simulations show that the more mesenchymal CSCs lie at the invasive edge, while the hybrid epithelial/mesenchymal (E/M) CSCs reside in the tumor interior. Further, motivated by the role of Notch-Jagged signaling in mediating EMT and stemness, we investigated the microenvironmental factors that promote Notch-Jagged signaling. We show that many inflammatory cytokines that can promote Notch-Jagged signaling such as IL-6 can (a) stabilize a hybrid E/M phenotype, (b) increase the likelihood of spatial proximity of hybrid E/M cells, and (c) expand the fraction of CSCs. To validate the predicted connection between Notch-Jagged signaling and stemness, we knocked down JAG1 in hybrid E/M SUM149 human breast cancer cells in vitro . JAG1 knockdown significantly restricted organoid formation, confirming the key role that Notch-Jagged signaling can play in tumor progression. Together, our integrated computational-experimental framework reveals the underlying principles of spatiotemporal dynamics of EMT and CSCs in the tumor microenvironment. Significance statement The presence of heterogeneous subsets of cancer stem cells (CSCs) remains a clinical challenge. These subsets often occupy different regions in the primary tumor and have varied epithelial-mesenchymal phenotypes. Here, we device a theoretical framework to investigate how the tumor microenvironment (TME) modulates this spatial patterning. We find that a spatial gradient of EMT-inducing signal, coupled with juxtacrine Notch-JAG1 signaling triggered by inflammatory cytokines in TME, explains this spatial heterogeneity. Finally, in vitro JAG1 knockdown experiments in triple negative breast cancer cells severely restricts the growth of tumor organoid, hence validating the association between JAG1 and CSC fraction. Our results offer insights into principles of spatiotemporal patterning in TME, and identifies a relevant target to alleviate multiple CSC subsets – JAG1.