Immunotherapy targeting HER2 with genetically modified T cells eliminates tumor-initiating cells in osteosarcoma. Despite radical surgery and multi-agent chemotherapy, less than one third of patients with recurrent or metastatic osteosarcoma (OS) survive. The limited efficacy of current therapeutic approaches to target tumor-initiating cells (TICs) may explain this dismal outcome. The purpose of this study was to assess the impact of modified T cells expressing a human epidermal growth factor receptor (HER2)-specific chimeric antigen receptor in the OS TIC compartment of human established cell lines. Using the sarcosphere formation assay, we found that OS TICs were resistant to increasing methotrexate concentrations. In contrast, HER2-specific T cells decreased markedly sarcosphere formation capacity and the ability to generate bone tumors in immunodeficient mice after orthotopic transplantation. In vivo, administration of HER2-specific T cells significantly reduced TICs in bulky tumors as judged by decreased sarcosphere forming efficiency in OS cells isolated from explanted tumors. We demonstrate that HER2-specific T cells target drug resistant TICs in established OS cell lines, suggesting that incorporating immunotherapy into current treatment strategies for OS has the potential to improve outcomes.