P85α, which acts as a tumour suppressor, is frequently found to be downregulated in various human cancers. However, the role of p85α in the tumour microenvironment is unknown. Here, we report that aberrantly low expression of p85α in breast cancer stroma is clinically relevant to breast cancer disease progression. Stromal fibroblasts can acquire the hallmarks of cancer-associated fibroblasts (CAFs) as a result of the loss of p85α expression. Paracrine Wnt10b from p85α-deficient fibroblasts can promote cancer progression via epithelial-to-mesenchymal transition (EMT) induced by the canonical Wnt pathway. Moreover, exosomes have a key role in paracrine Wnt10b transport from fibroblasts to breast cancer epithelial cells. Our results reveal that p85α expression in stromal fibroblasts haves a crucial role in regulating breast cancer tumourigenesis and progression by modifying stromal-epithelial crosstalk and remodelling the tumour microenvironment. Therefore, p85α can function as a tumour suppressor and represent a new candidate for diagnosis, prognosis and targeted therapy.