Small extracellular vesicles (sEV) contribute to the crosstalk between tumor cells and stroma, but the underlying signals are elusive. Here, we show that sEV generated by breast cancer cells in hypoxic (sEV^HYP), but not normoxic (sEV^NORM) conditions activate NFκB in recipient normal mammary epithelial cells. This increases the production and release of inflammatory cytokines, promotes mitochondrial dynamics leading to heightened cell motility and disrupts 3D mammary acini architecture with aberrant cell proliferation, reduced apoptosis and EMT. Mechanistically, Integrin-Linked Kinase packaged in sEV^HYP via HIF1α is sufficient to activate NFκB in the normal mammary epithelium, in vivo. Therefore, sEV^HYP activation of NFκB drives multiple oncogenic steps of inflammation, mitochondrial dynamics, and mammary gland morphogenesis in a breast cancer microenvironment.