Activation of myofibroblast rich stroma is a rate-limiting step essential for cancer progression. The responsible factors are not fully understood, but TGFβ1 is probably critical. A proportion of TGFβ1 is associated with extracellular nano-vesicles termed exosomes, secreted by carcinoma cells, and the relative importance of soluble and vesicular TGFβ in stromal activation is presented. Prostate cancer exosomes triggered TGFβ1-dependent fibroblast differentiation, to a distinctive myofibroblast phenotype resembling stromal cells isolated from cancerous prostate tissue; supporting angiogenesis in vitro and accelerating tumour growth in vivo. Myofibroblasts generated using soluble TGFβ1 were not pro-angiogenic or tumour-promoting. Cleaving heparan sulphate side chains from the exosome surface had no impact on TGFβ levels yet attenuated SMAD-dependent signalling and myofibroblastic differentiation. Eliminating exosomes from the cancer cell secretome, targeting Rab27a, abolished differentiation and lead to failure in stroma-assisted tumour growth in vivo. Exosomal TGFβ1 is therefore required for the formation of tumour-promoting stroma.