Epigenetic mechanisms permit the stable inheritance of cellular properties without changes in DNA sequence or amount. In prostate carcinoma, epigenetic mechanisms are essential for development and progression, complementing, amplifying and diversifying genetic alterations. DNA hypermethylation affects at least 30 individual genes, while repetitive sequences including retrotransposons and selected genes become hypomethylated. Hypermethylation of several genes occurs in a coordinate manner early in carcinogenesis and can be exploited for cancer detection, whereas hypomethylation and further hypermethylation events are associated with progression. DNA methylation alterations interact with changes in chromatin proteins. Prominent alterations at this level include altered patterns of histone modification, increased expression of the EZH2 polycomb histone methyltransferase, and changes in transcriptional corepressors and coactivators. These changes may make prostate carcinoma particularly susceptible to drugs targeting chromatin and DNA modifications. They relate to crucial alterations in a network of transcription factors comprising ETS family proteins, the androgen receptor, NKX3.1, KLF, and HOXB13 homeobox proteins. This network controls differentiation and proliferation of prostate epithelial cells integrating signals from hormones, growth factors and cell adhesion proteins that are likewise distorted in prostate cancer. As a consequence, prostate carcinoma cells appear to be locked into an aberrant state, characterized by continued proliferation of largely differentiated cells. Accordingly, stem cell characteristics of prostate cancer cells appear to be secondarily acquired. The aberrant differentiation state of prostate carcinoma cells also results in distorted mutual interactions between epithelial and stromal cells in the tumor that promote tumor growth, invasion, and metastasis.