Exosomes are small membrane vesicles secreted into the extracellular environment by various types of cells, including tumor cells. Exosomes are enriched with a discrete set of cellular proteins, and therefore expected to exert diverse biological functions according to cell origin. Mesenchymal stem cells (MSCs) possess the potential for differentiation into multi-lineages and can also function as precursors for tumor stroma including myofibroblast that provides a favorable environment for tumor progression. Although a close relationship between tumor cells and MSCs in a neoplastic tumor microenvironment has already been revealed, how this communication works is poorly understood. In this study, we investigated the influence of tumor cell-derived exosomes on MSCs by treating adipose tissue-derived MSCs (ADSCs) with breast cancer-derived exosomes. The exosome-treated ADSCs exhibited the phenotypes of tumor-associated myofibroblasts with increased expression of alpha-SMA. Exosome treatment also induced increased expression of tumor-promoting factors SDF-1, VEGF, CCL5 and TGF beta. This phenomenon was correlated with increased expression of TGF beta receptor I and II. Analysis of SMAD2, a key player in the TGF beta receptor-mediated SMAD pathway, revealed that its phosphorylation was increased by exosome treatment and was inhibited by treatment with SB431542, an inhibitor of the SMAD-mediated pathway, resulting in decreased expression of alpha-SMA. Taken together, our results show that tumor-derived exosomes induced the myofibroblastic phenotype and functionality in ADSCs via the SMAD-mediated signaling pathway. In conclusion, this study suggests that tumor-derived exosomes can contribute to progression and malignancy of tumor cells by converting MSCs within tumor stroma into tumor-associated myofibroblasts in the tumor microenvironment.