Emerging evidence has shown that both prostatic basal and luminal cells are able to initiate oncogenic transformation. However, despite the diversity of tumor-initiating cells, most prostate cancer cells express the androgen receptor (AR) and depend on androgens for their growth and expansion, implicating an essential role of androgen signaling in prostate tumorigenesis. Prostatic basal cells express p63 and are able to differentiate into luminal, neuroendocrine, and basal cells. Here, we directly assessed the essential role of androgen signaling in prostatic p63-expressing cell initiated oncogenic transformation and tumor formation. Using novel and relevant mouse models, we demonstrated that, with stabilized β-catenin expression, prostatic p63-expressing cells possess the ability to initiate oncogenic transformation and, in the presence of androgens, they further transdifferentiate into luminal-like tumor cells and develop adenocarcinomas. Castration prior to activating stabilized β-catenin sensitizes p63-expressing cells and increases their sensitivity to androgens, resulting in aggressive and fast growing tumor phenotypes. These findings are consistent with what have been observed in human prostate cancers, demonstrating an essential role for androgen signaling in prostate cancer initiation and progression. This study also provides fresh insight into developing new therapeutic strategies for better treating prostate cancer patients.