This review on normal and neoplastic growth of the prostate emphasizes the importance of epithelial-mesenchymal/stromal interactions. Accordingly, during prostatic development urogenital sinus mesenchyme (a) specifies prostatic epithelial identity, (b) induces epithelial bud formation, (c) elicits prostatic bud growth and regulates ductal branching, (d) promotes differentiation of a secretory epithelium, and (e) specifies the types of secretory proteins expressed. In reciprocal fashion, prostatic epithelium induces smooth muscle differentiation in the mesenchyme. Epithelial-mesenchymal interactions during development continue postnatally into adulthood as stromal-epithelial interactions which play a homeostatic role and in so doing reciprocally maintain epithelial and stromal differentiation and growth-quiescence. Prostatic carcinogenesis involves perturbation of these reciprocal homeostatic cell-cell interactions. The central role of mesenchyme in prostatic epithelial development has been firmly established through analysis of tissue recombinants composed of androgen-receptor-positive wild-type mesenchyme and androgen-receptor-negative epithelium. These studies revealed that at the very least ductal morphogenesis, epithelial cytodifferentiation, epithelial apoptosis and epithelial proliferation are regulated by stromal and not epithelial androgen receptors. Likewise, progression from non-tumorigenesis to tumorigenesis elicited by testosterone plus estradiol proceeds via paracrine mechanisms. Thus, stromal-epithelial interactions play critical roles in the hormonal, cellular, and molecular regulation of normal and neoplastic prostatic development.