Dicer is an RNase III enzyme essential for microRNA maturation. Dicer ablation in diverse tissues has been shown to block tissue differentiation, induce cell apoptosis, impair specialized cellular function, and perturb organ structures. To gain insight into the role of microRNAs in prostate tissue function and homeostasis, we conditionally disrupted Dicer activity in the mouse prostate using an ARR2PB-Cre. We demonstrated that Dicer activity is disrupted in both prostatic basal/stem cells and differentiated luminal cells. Dicer knockout murine prostates are smaller in size and mass and develop epithelial hypotrophy in ventral prostates by 4 months. Dicer ablation induces increased apoptosis in the prostate, predominantly in the differentiated luminal cells. Paradoxically, a concurrent increase in proliferation is observed in both basal/stem cells and luminal cells, presumably due to compensatory growth of the cells devoid of homologous recombination in response to the elevated cellular apoptosis. We have previously shown that Lin(CD31CD45Ter119)(-)Sca-1(+)CD49f(high) (LSC) cells enrich for prostate stem cell activity. Through proliferation and differentiation, some LSC cells are capable of forming prostate spheres composed of cells at various stages of differentiation. Although LSC cells were expanded by threefold in Dicer knockout mice, the sphere-forming units of Dicer knockout prostate cells decreased by more than half compared with wild-type cells. In addition, most prostate spheres in the Dicer knockout culture were derived from cells that did not undergo homologous recombination. Our results demonstrate a critical role of microRNAs for the proliferative capacity of prostate stem cells and the maintenance of prostate homeostasis.