There is a growing interest in the cell-cell communication roles in cancer mediated by secreted vesicles termed exosomes. In this study, we examined whether exosomes produced by cancer cells could transmit information to normal stromal fibroblasts and trigger a cellular response. We found that some cancer-derived exosomes could trigger elevated α-smooth muscle actin expression and other changes consistent with the process of fibroblast differentiation into myofibroblasts. We show that TGF-β is expressed at the exosome surface in association with the transmembrane proteoglycan betaglycan. Although existing in a latent state, this complex was fully functional in eliciting SMAD-dependent signaling. Inhibiting either signaling or betaglycan expression attenuated differentiation. While the kinetics and overall magnitude of the response were similar to that achieved with soluble TGF-β, we identified important qualitative differences unique to the exosomal route of TGF-β delivery, as exemplified by a significant elevation in fibroblast FGF2 production. This hitherto unknown trigger for instigating cellular differentiation in a distinctive manner has major implications for mechanisms underlying cancer-recruited stroma, fibrotic diseases, and wound-healing responses.