Tumor stromal cells can supply appropriate signals that may develop aggressive phenotypes of carcinoma cells and establish a complex scenario which culminates in metastasis. Recent works proposed that bone marrow-derived mesenchymal stem cells (MSC) are recruited to primary tumors. However, the exact functions of these cells in the tumor microenvironment are not well characterized, as it is reported that MSC can either promote or inhibit tumor progression. In the present study, we aim at investigating the signaling molecules which regulate the interplay between MSC, prostate carcinoma (PCa) cells and two important cellular types constituting the tumor-associated stroma, macrophages and fibroblasts, during their progression toward malignancy. We identified TGF-β1 as a crucial molecule able to attract MSC recruitment both to PCa cells as well as to tumor stroma components. Moreover, PCa- and tumor stroma-secreted TGF-β1 is important to induce MSC transdifferentiation into carcinoma-associated fibroblast (CAF)-like cells. Consequently, the CAF-like phenotype acquired by MSC is central to promote tumor progression related effects. Thus, tumor-educated MSC enhance PCa invasiveness compared to nonactivated MSC. Additionally, differing from normal MSC, CAF-like MSC perform vascular mimicry and recruit monocytes, which can be further polarized to M2 macrophages within the PCa environment. Our findings indicate a prominent role for TGF-β1 in MSC mobilization and activation strengthened by the fact that the blockade of TGF-β1 signaling impairs MSC promotion of PCa progression. Stem Cells 2016;34:2536-2547.