Unitary transformations of a Hamiltonian generally induce interaction terms beyond the particle rank present in the untransformed Hamiltonian that have to be captured and included in a many-body calculation. In systems with strangeness such as hypernuclei, the three-body terms induced by the hyperon-nucleon interaction are strong, so their inclusion is crucial.We present in detail a procedure for computing hyperon-nucleon-nucleon interaction terms that are induced during a similarity renormalization group (SRG) flow. The SRG is carried out in a basis spanned by antisymmetric harmonic-oscillator states with respect to three-body Jacobi coordinates. We discuss basis construction, antisymmetrization, numerical evaluation of the flow equations, and separation of the genuine three-body terms.We then use the hypernuclear no-core shell model with SRG-evolved Hamiltonians, addressing the sensitivity of hypernuclear states and hyperon separation energies to changes in the nucleonic Hamiltonian by example of 7 Λ Li, 9 Λ Be, 11 Λ B, 13 Λ C, and the hyper-helium chain. We also present a survey of the hyper-hydrogen chain, exploring the structure of hypernuclei with extreme neutron-proton asymmetries.