Despite the potential utility of adipose-derived mesenchymal stem cells (ADSCs) in regenerative medicine, not much is known about their interaction with residual cancer cells. Here, we studied the direct co-culture effects of ADSCs on H358 lung cancer cells. The paracrine effects of ADSCs were compared to those of the cancer-associated fibroblasts. Extracellular matrix and conditioned media were used to determine the underlying molecules. Time-lapse photography, fluorescence-activated cell sorting (FACS), scratch assays, immunocytochemistry, and reverse-transcription polymerase chain reaction were used to analyze the effects. ADSCs differentiated into myofibroblasts expressing αSMA, and H358 cells strongly attached to them. EMT-like changes were observed in H358 cells which were inhibited by γ-secretase inhibitor, a-NOTCH inhibitor. Surprisingly, both mesenchymal and epithelial genes were expressed, and the effects were readily reversed when cells were sorted by FACS. These data suggest that ADSCs may differentiate into tumor stroma that plays supportive roles during cancer progression.