Freshly isolated mouse prostate epithelial cells regenerate fully differentiated prostate tissue when combined with embryonic urogenital sinus mesenchyme and grafted in vivo. We show here that this regenerative capacity, which has been attributed to a small population of pleuripotential progenitor epithelial cells, is rapidly lost when the cells are placed in monolayer culture but can be maintained by culture in anchorage-independent conditions. Epithelial cells placed in anchorage-independent culture formed proliferating spheres that could be serially passaged and exhibited increased expression of putative stem cell markers as compared to cells grown in monolayer culture. Epithelial cells isolated from the fetal urogenital sinus, the newborn, and adult prostate formed spheres with similar efficiency, while cells isolated from the post-castration prostate exhibited significantly higher sphere-forming abilities. When passaged spheres were recombined with E17 rat urogenital sinus mesenchyme and grafted in vivo, they generated fully differentiated mouse prostate glandular epithelium containing both p63+ basal cells and p63− luminal cells and expressing a variety of prostate-specific and terminal differentiation markers.