PTEN (phosphatase and tensin homolog deleted on chromosome 10) is a potent tumor suppressor gene frequently mutated in human prostate cancers. Deletion of Pten in a murine model of prostate cancer recapitulates the disease progression seen in humans. Using defined cell lineage markers, we demonstrate that PTEN negatively regulates p63-positive prostatic basal cell proliferation without blocking differentiation. Concomitant with basal cell proliferation is the expansion of a prostate stem/progenitor-like subpopulation as evidenced by the progressive increase of stem cell antigen-1 (Sca-1)- and BCL-2-positive cells. This observation provides strong evidence that basal cell proliferation can be an initiating event for precancerous lesions. Sca-1⁺ and BCL-2⁺ progenitors may serve as cancer-initiating cells in this model.