The paracrine interaction between tumor cells and adjacent stroma has been associated with the oncogenic activity of the Hedgehog (Hh) pathway in triple-negative breast tumors. The present study developed a model of paracrine Hh signaling and examined the impact of mesenchymal cell sources and culture modalities in the oncogenicity of the Hh pathway in breast tumor cells. Studies consisted of tumor cell monocultures and co-cultures with cancer-associated and normal fibroblasts, tumor cells that undergo epithelial–mesenchymal transition (EMT), or adipose-derived mesenchymal stem cells (ADMSCs). Hh ligand and pathway inhibitors, GANT61 and NVP-LDE225 (NVP), were evaluated in both cell cultures and a mouse xenograft model. Results in monocultures show that tumor cell viability and Hh transcriptional activity were not affected by Hh inhibitors. In co-cultures, down-regulation of GLI1, SMO, and PTCH1 in the stroma correlated with reduced tumor growth rates in xenografted tumors and cell cultures, confirming a paracrine interaction. Fibroblasts and EMT cells supported Hh transcriptional activity and enhanced tumor cell growth. Mixed and adjacent culture modalities indicate that tumor growth is supported via fibroblast-secreted soluble factors, whereas enriched tumor stemness requires close proximity between tumor and fibroblasts. Overall this study provides a tumor–mesenchymal model of Hh signaling and highlights the therapeutic value of mesenchymal cells in the oncogenic activity of the Hh pathway.