Bone marrow stromal (Mesenchymal) stem cells (MSCs) are multipotent bone cells capable of differentiating into mesoderm-type cells, such as osteoblasts and adipocytes. Existing evidence suggests that transformation of MSCs gives rise to sarcoma. In order to identify the molecular mechanism leading to spontaneous transformation of human bone marrow MSCs (hBMSCs), we performed comprehensive microRNA (miRNA) and mRNA profiling in the transformed hBMSC-Tum line compared to the parental clone. As a result, we identified multiple dysregulated molecular networks associated with the hBMSC transformed phenotype. LIN28B was upregulated 177.0-fold in hBMSC-Tum, which was associated with marked reduction in LET-7 expression and upregulated expression of its target HMGA2. Targeted depletion of LIN28B or exogenous expression of LET-7b suppressed hBMSC-Tum proliferation, colony formation, and migration. On the other hand, forced expression of LIN28B promoted malignant transformation of parental hBMSC cells as shown by enhanced in vitro colony formation, doxorubicin resistance, and in vivo tumor formation in immunocompromised mice. Analysis of LIN28B and HMGA2 expression levels in cohorts from The Cancer Genome Atlas sarcoma dataset revealed a strong inverse-relationship between elevated expression and overall survival (OS) in 260 patients (p = 0.005) and disease-free survival (DFS) in 231 patients (p = 0.02), suggesting LIN28B and HMGA2 are important regulators of sarcoma biology. Our results highlight an important role for the LIN28B/LET-7 axis in human sarcoma pathogenesis and suggest that the therapeutic targeting of LIN28B may be relevant for patients with sarcoma.