Single-cell transcriptomic data has the potential to radically redefine our view of cell type identity. Cells that were previously believed to be homogeneous are now clearly distinguishable in terms of their expression phenotype. Methods for automatically characterizing the functional identity of cells, and their associated properties, can be used to uncover processes involved in lineage differentiation as well as sub-typing cancer cells. They can also be used to suggest personalized therapies based on molecular signatures associated with pathology. We develop a new method, called ACTION, to infer the functional identity of cells from their transcriptional profile, classify them based on their principal functions, and reconstruct regulatory networks that are responsible for mediating their identity. Results from using ACTION to sub-type cancer cells in Melanoma patients reveal novel biomarkers along with their underlying regulatory networks.