In solid tumors, a decreased oxygen and nutrient supply creates a hypoxic microenvironment in the central region. This hypoxic condition induces molecular responses of normal and cancer cells in the local area, including angiogenesis, metabolic changes, and metastasis. In addition, other cells including mesenchymal stem cells (MSCs) have been reported to be recruited into the hypoxic area of solid tumors. In our previous study, we found that hypoxic condition induces the secretion of growth factors and cytokines in MSCs, and here we demonstrate that elevated secretion of transforming growth factor-β (TGF-β) by MSCs under hypoxia promotes the growth, motility, and invasive ability of breast cancer cells. It was found that TGF-β promoter activity was regulated by hypoxia, and the major hypoxia-regulated element was located between bp -1030 to -666 in front of the TGF-β promoter region. In ChIP assay, the results revealed that HIF-1 was bound to the hypoxia response element (HRE) of TGF-β promoter. Collectively, the results indicate that hypoxia microenvironment can enhance cancer cell growth through the paracrine effects of the MSCs by driving their TGF-β gene expression and secretion. Therefore, extra caution has to be exercised when considering hypoxia pretreatment of MSCs before cell transplantation into patients for therapeutic purposes, particularly in patients susceptible to tumor growth.