Osteosarcoma is the most common type of bone cancer, and the second leading cause of cancer-related death in children and young adults. Osteosarcoma stem cells are essential for osteosarcoma initiation, metastasis, chemoresistance and recurrence. In the present study, we report that: 1) higher TSSC3 expression indicates a better prognosis for osteosarcoma patients, and; 2) overexpression of TSSC3 significantly decreases sphere-forming capacity, tumor initiation, stemness-related surface markers and Nanog expression in osteosarcoma cells. We also discovered that higher Nanog expression correlates to a worse prognosis for osteosarcoma patients, and overexpression of Nanog increases the stem-related phenotype in osteosarcoma cells. Knockdown of Nanog suppresses these phenotypes. Inhibition of Nanog expression and self-renewal of osteosarcoma cells by TSSC3 overexpression appears to be mediated through inactivation of the Src/Akt pathway. In the clinical setting, expression of TSSC3, p-Src and Nanog is associated with recurrence, metastasis and surgical intervention. Lower TSSC3 expression, higher Nanog expression or higher p-Src expression indicate a poor prognosis for osteosarcoma patients. Overall, our study demonstrates that TSSC3 inhibits the stem-like phenotype and Nanog expression by inactivation of the Src/Akt pathway; this emphasizes the importance of Nanog in osteosarcoma stem cells.