Prostate development and maturation requires stromal-epithelial interactions and androgen action via the androgen receptor (AR) within these compartments. However, the specific roles of epithelial and stromal AR in postnatal prostate differentiation are unclear. We used Cre-LoxP technology to determine the prostate phenotype in mice with epithelial-selective genetic inactivation of the AR leaving the stromal AR functionally intact. We find that prostate development abolished in mice globally lacking a functional AR can be rescued by restricting the AR knockout to the postnatal prostate epithelium. We show that, at 8 wk of age, prostate epithelial AR knockout (PEARKO) mice exhibit prostate development with normal branching morphogenesis but lobe-specific decrease in prostate weight and hindered structural and functional differentiation of the mature prostate epithelium. No change was observed in PEARKO testis weight or serum testosterone compared with littermate controls. The most striking change was increased proliferation and abnormal lesions of epithelial cells predominantly in the anterior lobe of PEARKO mice. These findings highlight the vital role of stromal AR in postnatal prostate growth and structural differentiation and emphasize the requirement of epithelial AR in maintaining functional differentiation and restraining proliferation of epithelial cells in a lobe-specific manner. This unique PEARKO mouse provides a new paradigm with which to define the molecular mechanisms of the androgen signaling in mature prostate lobes in vivo and provides insight into the identification of better targets for treatment of prostate cancer and hyperplasia.