This review summarizes the history of research on mesenchymal-epithelial interactions in prostatic development from the first studies in 1970 to the present. From this study we have learned that prostatic development requires a reciprocal interaction between epithelium and mesenchyme in which urogenital sinus mesenchyme induces and patterns epithelial development and differentiation, while developing prostatic epithelium induces and patterns mesenchymal differentiation into smooth muscle and other resident cell types in the stroma. Prostatic development requires androgen action mediated by the androgen receptor (AR). Through analysis of tissue recombinants composed of wild-type and AR-null epithelium and mesenchyme, we have learned that many "androgenic effects" on prostatic epithelium do not require epithelial AR, but instead are elicited by the paracrine action of AR-positive mesenchyme. Present and future studies reviewed in this issue deal with the molecular mechanisms in this developmental communication between epithelium and mesenchyme.