Androgen signals through androgen receptor (AR) to influence prostate development and cancer. How stromal and epithelial AR regulate prostate homeostasis remains unclear. Using genetic lineage tracing, we systematically investigated the role of cell-autonomous AR in different prostate epithelial cell types. Here we show that AR is dispensable for basal cell maintenance, but is cell-autonomously required for the luminal differentiation of rare basal stem cells. In contrast, AR deletion in luminal cells alters cell morphology and induces transient over-proliferation, without affecting androgen-mediated luminal cell survival or regeneration. However, AR is selectively required for the maintenance of daughter cells produced by castration-resistant Nkx3.1-expressing luminal stem cells (CARNs). Notably, Pten loss can override AR-loss effects in both basal and luminal compartments to initiate tumours. Our data reveal distinct cell-type-specific roles of epithelial AR in orchestrating prostate homeostasis, and question the notion that epithelial AR serves as a tumour suppressor in early cancer initiation.