Stemness encompasses the capability of a cell for self-renewal and differentiation. The stem cell maintains a balance between proliferation, quiescence, and regeneration via interactions with the microenvironment. Previously, we showed that ectopic expression of the mitochondrial ribosomal protein S18-2 (MRPS18-2) led to immortalization of primary fibroblasts, accompanied by induction of an embryonic stem cell (ESC) phenotype. Moreover, we demonstrated interaction between S18-2 and the retinoblastoma-associated protein (RB) and hypothesized that the simultaneous expression of RB and S18-2 is essential for maintaining cell stemness. Here, we experimentally investigated the role of S18-2 in cell stemness and differentiation. Concurrent expression of RB and S18-2 resulted in immortalization ofRb1−/−primary mouse embryonic fibroblasts and in aggressive tumor growth in severe combined immunodeficiency mice. These cells, which express both RB and S18-2 at high levels, exhibited the potential to differentiate into various lineages in vitro, including osteogenic, chondrogenic, and adipogenic lineages. Mechanistically, S18-2 formed a multimeric protein complex with prohibitin and the ring finger protein 2 (RNF2). This molecular complex increased the monoubiquitination of histone H2ALys119, a characteristic trait of ESCs, by enhanced E3-ligase activity of RNF2. Furthermore, we found enrichment of KLF4 at theS18-2promoter region and that theS18-2expression is positively correlated withKLF4levels. Importantly, knockdown of S18-2 in zebrafish larvae led to embryonic lethality. Collectively, our findings suggest an important role for S18-2 in cell stemness and differentiation and potentially also in cancerogenesis.