Neoadjuvant chemotherapy (NAC) induces a pathological complete response (pCR) in ∼30% of patients with breast cancer. However, many patients have residual cancer after chemotherapy, which correlates with a higher risk of metastatic recurrence and poorer outcome than those who achieve a pCR. We hypothesized that molecular profiling of tumors after NAC would identify genes associated with drug resistance. Digital transcript counting was used to profile surgically resected breast cancers after NAC. Low concentrations of dual specificity protein phosphatase 4 (DUSP4), an ERK phosphatase, correlated with high post-NAC tumor cell proliferation and with basal-like breast cancer (BLBC) status. BLBC had higher DUSP4 promoter methylation and gene expression patterns of Ras-ERK pathway activation relative to other breast cancer subtypes. DUSP4 overexpression increased chemotherapy-induced apoptosis, whereas DUSP4 depletion dampened the response to chemotherapy. Reduced DUSP4 expression in primary tumors after NAC was associated with treatment-refractory high Ki-67 scores and shorter recurrence-free survival. Finally, inhibition of mitogen-activated protein kinase kinase (MEK) synergized with docetaxel treatment in BLBC xenografts. Thus, DUSP4 downregulation activates the Ras-ERK pathway in BLBC, resulting in an attenuated response to anti-cancer chemotherapy. © 2012 Nature America, Inc. All rights reserved.