Mesenchymal stem cells (MSCs) have been shown to be able to inhibit cancer cells growth. In this study, we investigate the role and the molecular mechanism of hypoxia-inducible factor 1-alpha (HIF-1α) in inhibition of cancer cell proliferation by human MSCs through depletion and overexpression of HIF-1α in human MSCs. We found that the cell culture medium from HIF-1α-depleted Z3 cells significantly promotes breast cancer MCF-7 cell proliferation and colony formation. The expression of p21 is increased in MCF-7 cells, but p53 level remains unchanged. In contrast, the cultured medium from HIF-1α-overexpressed Z3 cells dramatically inhibits MCF-7 cell proliferation and colony formation. The expression of p21 is inhibited in MCF-7 cells, but p53 does not change. We conclude HIF-1α promotes inhibitory effect of human MCSs on breast cancer cell proliferation and colony formation. This process is tightly correlated with cell cycle protein p21 level in cancer cells.