Background & Aims: Pancreatic ductal adenocarcinoma (PDAC) is characterized by a fibroblast-rich desmoplastic stroma. Cancer-associated fibroblasts (CAFs) have been shown to display a high degree of interconvertible states including quiescent, inflammatory, and myofibroblastic phenotypes; however, the mechanisms by which this plasticity is achieved are poorly understood. Here, we aim to elucidate the role of CAF plasticity and its impact on PDAC biology. Methods: To investigate the role of mesenchymal plasticity in PDAC progression, we generated a PDAC mouse model in which CAF plasticity is modulated by genetic depletion of the transcription factor Prrx1. Primary pancreatic fibroblasts from this mouse model were further characterized by functional in vitro assays. To characterize the impact of CAFs on tumor differentiation and response to chemotherapy, various coculture experiments were performed. In vivo, tumors were characterized by morphology, extracellular matrix composition, and tumor dissemination and metastasis. Results: Our in vivo findings showed that Prrx1-deficient CAFs remain constitutively activated. Importantly, this CAF phenotype determines tumor differentiation and disrupts systemic tumor dissemination. Mechanistically, coculture experiments of tumor organoids and CAFs showed that CAFs shape the epithelial-to-mesenchymal phenotype and confer gemcitabine resistance of PDAC cells induced by CAF-derived hepatocyte growth factor. Furthermore, gene expression analysis showed that patients with pancreatic cancer with high stromal expression of Prrx1 display the squamous, most aggressive, subtype of PDAC. Conclusions: Here, we define that the Prrx1 transcription factor is critical for tuning CAF activation, allowing a dynamic switch between a dormant and an activated state. This work shows that Prrx1-mediated CAF plasticity has significant impact on PDAC biology and therapeutic resistance.