The crosstalk between tumor cells and the adjacent normal epithelium contributes to cancer progression, but its regulators have remained elusive. Here, we show that breast cancer cells maintained in hypoxia release small extracellular vesicles (sEVs) that activate mitochondrial dynamics, stimulate mitochondrial movements, and promote organelle accumulation at the cortical cytoskeleton in normal mammary epithelial cells. This results in AKT serine/threonine kinase (Akt) activation, membrane focal adhesion turnover, and increased epithelial cell migration. RNA sequencing profiling identified integrin-linked kinase (ILK) as the most upregulated pathway in sEV-treated epithelial cells, and genetic or pharmacologic targeting of ILK reversed mitochondrial reprogramming and suppressed sEV-induced cell movements. In a three-dimensional (3D) model of mammary gland morphogenesis, sEV treatment induced hallmarks of malignant transformation, with deregulated cell death and/or cell proliferation, loss of apical-basal polarity, and appearance of epithelial-to-mesenchymal transition (EMT) markers. Therefore, sEVs released by hypoxic breast cancer cells reprogram mitochondrial dynamics and induce oncogenic changes in a normal mammary epithelium. Display omitted •Hypoxic breast cancer cells release signaling sEVs•sEVs activate mitochondrial dynamics in recipient normal mammary epithelium•Mitochondrial reprogramming stimulates ILK-Akt-dependent epithelial cell migration•sEVs disrupt normal mammary gland morphogenesis with hallmarks of malignancy The communication between tumor cells and their neighbors is important for disease progression. Here, Bertolini et al. show that hypoxic breast cancer cells release small extracellular vesicles that introduce multiple malignant changes in the normal mammary epithelium via reprogramming of mitochondrial functions. This pathway may promote local breast cancer recurrences.