Accumulating evidence suggests that many tumors have a hierarchical organization, with the bulk of the tumor composed of relatively differentiated short-lived progenitor cells that are maintained by a small population of undifferentiated long-lived cancer stem cells. It is unclear, however, whether cancer stem cells originate from normal stem cells or from dedifferentiated progenitor cells. To address this, we mathematically modeled the effect of dedifferentiation on carcinogenesis. We considered a hybrid stochastic-deterministic model of mutation accumulation in both stem cells and progenitors, including dedifferentiation of progenitor cells to a stem cell-like state. We performed exact computer simulations of the emergence of tumor subpopulations with two mutations, and we derived semi-analytical estimates for the waiting time distribution to fixation. Our results suggest that dedifferentiation may play an important role in carcinogenesis, depending on how stem cell homeostasis is maintained. If the stem cell population size is held strictly constant (due to all divisions being asymmetric), we found that dedifferentiation acts like a positive selective force in the stem cell population and thus speeds carcinogenesis. If the stem cell population size is allowed to vary stochastically with density-dependent reproduction rates (allowing both symmetric and asymmetric divisions), we found that dedifferentiation beyond a critical threshold leads to exponential growth of the stem cell population. Thus, dedifferentiation may play a crucial role, the common modeling assumption of constant stem cell population size may not be adequate, and further progress in understanding carcinogenesis demands a more detailed mechanistic understanding of stem cell homeostasis. 