Increased expression of PSMA, a differentiation antigen with folate hydrolase activity, is an independent marker of prostate cancer progression. Mice expressing moderate levels of human PSMA in their prostate develop PIN-like lesions by 9 months. The aim of this study was to determine whether PSMA is involved in prostate carcinogenesis and progression and, if so, the possible mechanism by which PSMA may exert its effects. Using prostates from PSMA-transgenic mice, we developed a tissue recombinant model that exhibits small atypical glands with features of adenocarcinoma. This was not observed in tissue recombinants that were composed of prostate tissues from the wild-type siblings. Cells from PSMA-transgenic tissue recombinants have the ability to form colonies in semisolid agar. PSMA may facilitate this phenotype by increasing the invasive ability of cells. Ectopic PSMA expression on PC-3 cells increased the invasive capacity of cells in in vitro invasion assays, which could be competed out by folic acid. These results suggest PSMA facilitates the development of prostate cancer, and the invasive ability of these cells may be modulated by folate levels. These findings show a novel mechanism that may contribute to the known role of folate in cancer prevention, and may lead to the use of PSMA inhibitors as novel chemopreventive agents for prostate cancer. Moreover, our model should prove useful for further dissecting pathways involved in prostate carcinogenesis and progression.