The small leucine-rich proteoglycan decorin (DCN) is recognized for its diverse roles in tissue homeostasis and malignant progression. Nevertheless, the regulatory effects of DCN on bladder cancer stem cells (BCSCs) and the underlying mechanisms in muscle-invasive bladder cancer (MIBC) remain to be elucidated. The study obtained data (including scRNA-seq, clinicopathological characteristics, and survival) were acquired from TCGA and GEO. The BCSCs were cultured by enriching the suspension culture in a serum-free medium, followed by flow cytometry sorting. Overexpression/knockdown was constructed by utilizing lentivirus. The surface biomarkers of cancer stem cells were identified via flow cytometry. Cell proliferation and self-renewal were evaluated by CCK8 and Sphere formation assays, and in vivo tumor growth was evaluated with subcutaneous xenografts. Total DCN expression was significantly elevated in muscle-invasive bladder cancer (MIBC) and was associated with poor prognosis. The ΔDCN isoform, which lacks glycosylation sites, was identified in bladder cancer stem cells (BCSCs) derived from clinical tissue samples and bladder cancer cell lines. Suppression of ΔDCN expression resulted in a reduction of BCSC stemness. Both in vitro and in vivo experiments indicated that overexpression of full-length DCN inhibited stemness within the extracellular matrix. Conversely, overexpression of ΔDCN and the introduction of exogenous recombinant decorin protein in ΔDCN-knockdown BCSC-SW780 cell lines enhanced stemness within the cytoplasm. The ΔDCN isoform exhibited resistance to gemcitabine chemotherapy in vitro. Non-glycanated ΔDCN isoforms were identified in bladder cancer stem cells (BCSCs), where they exhibited differential cytoplasmic localization and promoted oncogenic effects by inducing a stemness phenotype and conferring resistance to gemcitabine chemotherapy. These oncogenic effects are in stark contrast to the anti-tumor functions of glycosylated DCN in the extracellular matrix. The ratio of ΔDCN isoforms to glycosylated DCN is pivotal in predicting tumor progression and therapeutic resistance.