β-Arrestins are classic attenuators of G-protein–coupled receptor signaling. However, they have multiple roles in cellular physiology, including carcinogenesis. This work shows for the first time that β-arrestins have prognostic significance for predicting metastasis and response to chemotherapy in bladder cancer. β-Arrestin-1 (ARRB1) and β-arrestin-2 (ARRB2) mRNA levels were measured by quantitative RT-PCR in two clinical specimen cohorts (n = 63 and 43). The role of ARRBs in regulating a stem cell-like phenotype and response to chemotherapy treatments was investigated. The consequence of forced expression of ARRBs on tumor growth and response to Gemcitabine in vivo were investigated using bladder tumor xenografts in nude mice. ARRB1 levels were significantly elevated and ARRB2 levels downregulated in cancer tissues compared with normal tissues. In multivariate analysis only ARRB2 was an independent predictor of metastasis, disease-specific-mortality, and failure to Gemcitabine + Cisplatin (G+C) chemotherapy; ∼80% sensitivity and specificity to predict clinical outcome. ARRBs were found to regulate stem cell characteristics in bladder cancer cells. Depletion of ARRB2 resulted in increased cancer stem cell markers but ARRB2 overexpression reduced expression of stem cell markers (CD44, ALDH2, and BMI-1), and increased sensitivity toward Gemcitabine. Overexpression of ARRB2 resulted in reduced tumor growth and increased response to Gemcitabine in tumor xenografts. CRISPR-Cas9–mediated gene-knockout of ARRB1 resulted in the reversal of this aggressive phenotype. ARRBs regulate cancer stem cell-like properties in bladder cancer and are potential prognostic indicators for tumor progression and chemotherapy response.