Smooth muscle cell (SMC) plasticity and phenotypic switching play prominent roles in the pathogenesis of multiple diseases, but their role in tumorigenesis is unknown. We investigated whether and how SMC diversity and plasticity plays a role in tumor angiogenesis and the tumor microenvironment. We use SMC-specific lineage-tracing mouse models and single cell RNA sequencing to observe the phenotypic diversity of SMCs participating in tumor vascularization. We find that a significant proportion of SMCs adopt a phenotype traditionally associated with macrophage-like cells. These cells are transcriptionally similar to 'resolution phase' M2b macrophages, which have been described to have a role in inflammation resolution. Computationally predicted by the ligand-receptor algorithm CellChat, signaling from BST2 on the surface of tumor cells to PIRA2 on SMCs promote this phenotypic transition; in vitro SMC assays demonstrate upregulation of macrophage transcriptional programs, and increased proliferation, migration, and phagocytic ability when exposed to BST2. Knockdown of BST2 in the tumor significantly decreases the transition towards a macrophage-like phenotype, and cells that do transition have a comparatively higher inflammatory signal typically associated with anti-tumor effect. As BST2 is known to be a poor prognostic marker in multiple cancers where it is associated with an M2 macrophage-skewed TME, these studies suggest that phenotypically switched SMCs may have a previously unidentified role in this immunosuppressive milieu. Further translational work is needed to understand how this phenotypic switch could influence the response to anti-cancer agents and if targeted inhibition of SMC plasticity would be therapeutically beneficial.