Myofibroblasts are a key cell type in wound repair, cardiovascular disease, and fibrosis and in the tumor-promoting microenvironment. The high accumulation of myofibroblasts in reactive stroma is predictive of the rate of cancer progression in many different tumors, yet the cell types of origin and the mechanisms that regulate proliferation and differentiation are unknown. We report here, for the first time to our knowledge, the characterization of normal human prostate-derived mesenchymal stem cells (MSCs) and the TGF-β1-regulated pathways that modulate MSC proliferation and myofibroblast differentiation. Human prostate MSCs combined with prostate cancer cells expressing TGF-β1 resulted in commitment to myofibroblasts. TGF-β1-regulated runt-related transcription factor 1 (RUNX1) was required for cell cycle progression and proliferation of progenitors. RUNX1 also inhibited, yet did not block, differentiation. Knockdown of RUNX1 in prostate or bone marrow-derived MSCs resulted in cell cycle arrest, attenuated proliferation, and constitutive differentiation to myofibroblasts. These data show that RUNX1 is a key transcription factor for MSC proliferation and cell fate commitment in myofibroblast differentiation. This work also shows that the normal human prostate gland contains tissue-derived MSCs that exhibit multilineage differentiation similar to bone marrow-derived MSCs. Targeting RUNX1 pathways may represent a therapeutic approach to affect myofibroblast proliferation and biology in multiple disease states.