Wnt signalling plays a critical role in the development of cancer. Recent studies indicate that Wnt signalling is negatively regulated by secreted Wnt antagonists such as secreted frizzled related proteins (sFRPs) and Dickkopfs (Dkks). We compared Dkk family expression levels in normal prostate and prostate cancer cells and found a reduction in Dkk-3 expression in cancer cells. Ectopic expression of Dkk-3 inhibited colony formation in LNCaP and PC3 prostate cancer cell lines and inducible expression of Dkk-3 reduced LNCaP cell proliferation. Moreover, small interfering RNA-mediated downregulation of Dkk-3 enhanced cell cycle progression in untransformed RWPE-1 prostate epithelial cells. Immunohistochemical analysis revealed that Dkk-3 is expressed in a subset of normal prostate gland acini and that Dkk-3 expression is reduced in prostate tumours, particularly those with a high Gleason grade, suggesting a role for Dkk-3 in postmitotic differentiation. Consistent with this, depletion of Dkk-3 disrupted acinar morphogenesis of RWPE-1 cells in a three-dimensional cell culture model. Our results are consistent with the loss of Dkk-3 expression resulting in impairment of glandular structure and uncontrolled prostate epithelial cell (PrEC) proliferation, both of which are crucial for prostate cancer progression.