Phyllodes tumors of breast, even histologically diagnosed as benign, can recur locally and have metastatic potential. Histologic markers only have limited value in predicting the clinical behavior of phyllodes tumors. It remains unknown what drives the malignant progression of phyllodes tumors. We found that the expression of myofibroblast markers, a-smooth muscle actin (a-SMA), fibroblast activation protein (FAP), and stromal cell-derived factor-1 (SDF-1), is progressively increased in the malignant progression of phyllodes tumors. Microarray showed that miR-21 was one of the most significantly upregulated microRNAs in malignant phyllodes tumors compared with benign phyllodes tumors. In addition, increased miR-21 expression was primarily localized to a-SMA-positive myofibroblasts. More importantly, a-SMA and miR-21 are independent predictors of recurrence and metastasis, with their predictive value of recurrence better than histologic grading. Furthermore, miR-21 mimics promoted, whereas miR-21 antisense oligos inhibited, the expression of a-SMA, FAP, and SDF-1, as well as the proliferation and invasion of primary stromal cells of phyllodes tumors. The ability of miR-21 to induce myofibroblast differentiation was mediated by its regulation on Smad7 and PTEN, which regulate the migration and proliferation, respectively. In breast phyllodes tumor xenografts, miR-21 accelerated tumor growth, induced myofibroblast differentiation, and promoted metastasis. This study suggests an important role of myofibroblast differentiation in the malignant progression of phyllodes tumors that is driven by increased miR-21. Cancer Res; 74(16); 4341-52. Ó2014 AACR.