Post-mitotic, differentiated cells exhibit a variety of characteristics that contrast with those of actively growing neoplastic cells, such as the expression of cell-cycle inhibitors and differentiation factors. We hypothesized that the gene expression profiles of these differentiated cells could reveal the identities of genes that may function as tumour suppressors. Here we show, using in vitro and in vivo studies in mice and humans, that the mitochondrial protein LACTB potently inhibits the proliferation of breast cancer cells. Its mechanism of action involves alteration of mitochondrial lipid metabolism and differentiation of breast cancer cells. This is achieved, at least in part, through reduction of the levels of mitochondrial phosphatidylserine decarboxylase, which is involved in the synthesis of mitochondrial phosphatidylethanolamine. These observations uncover a novel mitochondrial tumour suppressor and demonstrate a connection between mitochondrial lipid metabolism and the differentiation program of breast cancer cells, thereby revealing a previously undescribed mechanism of tumour suppression.