Breast cancer is the most frequently diagnosed malignancy and the leading cause of cancer‐related deaths in women worldwide. Cancer‐associated fibroblasts (CAFs) are one of the fundamental cellular components of the tumor microenvironment and play a critical role in the initiation, progression, and therapy resistance of breast cancer. However, the detailed molecular mechanisms of CAFs activation from normal fibroblasts (NFs) are still not well understood. In the present study, we reported that ZNF32 expression in breast cancer cells was negatively correlated with CAF‐related markers (FSP1, α‐SMA, and FAP) in stromal fibroblasts, and loss of ZNF32 promoted the activation of CAFs, as evidenced by the enhanced proliferation and contractility of CAFs. ZNF32 deficiency‐mediated fibroblast activation promoted the growth and metastasis of breast cancer cells in vitro and in vivo. Mechanistically, we demonstrated that ZNF32 inhibited TGFB1 transcription by directly binding to the −1968/−1962 region of the TGFB1 promoter, leading to the prevention of fibroblast activation. Altogether, our findings reveal an important mechanism by which ZNF32 suppression increases the transcription of the TGFB1 gene in breast cancer cells, and subsequently, elevated levels of secretory TGF‐β stimulate NFs transformation into CAFs, which in turn facilitates the malignant progression of breast cancer. Our data implicated ZNF32 as a potential therapeutic strategy against breast cancer.