In several organ systems the transitional zone between different types of epithelia is a hotspot for pre-neoplastic metaplasia and malignancy1–3. However, the cell-of-origin for the metaplastic epithelium and subsequent malignancy, remains obscure1–3. In the case of Barrett’s oesophagus (BE), intestinal metaplasia occurs at the gastro-oesophageal junction, where stratified squamous epithelium transitions into simple columnar cells4. Based on different experimental models, several alternative cell types have been proposed as the source of the metaplasia, but in all cases the evidence is inconclusive and no model completely mimics BE with the presence of intestinal goblet cells5–8. Here, we describe a novel transitional columnar epithelium with distinct basal progenitor cells (p63+ KRT5+ KRT7+) in the squamous-columnar junction (SCJ) in the upper gastrointestinal tract of the mouse. We use multiple models and lineage tracing strategies to show that this unique SCJ basal cell population serves as a source of progenitors for the transitional epithelium. Moreover, upon ectopic expression of CDX2 these transitional basal progenitors differentiate into intestinal-like epithelium including goblet cells, thus reproducing Barrett’s metaplasia. A similar transitional columnar epithelium is present at the transitional zones of other mouse tissues, including the anorectal junction, and, importantly, at the gastro-oesophageal junction in the human gut. Acid reflux-induced oesophagitis and the multilayered epithelium (MLE) believed to be a precursor of BE are both characterized by the expansion of the transitional basal progenitor cells. Taken together our findings reveal the presence of a previously unidentified transitional zone in the epithelium of the upper gastrointestinal tract and provide evidence that the p63+ KRT7+ basal cells in this zone are the cell-of-origin for MLE and BE.