Androgen-independent recurrence is the major limit of androgen ablation therapy for prostate cancer. Identification of alternative pathways promoting prostate tumor growth is thus needed. Stat5 has been recently shown to promote human prostate cancer cell survival/proliferation and to be associated with early prostate cancer recurrence. Stat5 is the main signaling pathway triggered by prolactin (PRL), a growth factor whose local production is also increased in high-grade prostate cancers. The first aim of this study was to use prostate-specific PRL transgenic mice to address the mechanisms by which local PRL induces prostate tumorogenesis. We report that (i) Stat5 is the major signaling cascade triggered by local PRL in the mouse dorsal prostate, (ii) this model recapitulates prostate tumorogenesis from precancer lesions to invasive carcinoma, and (iii) tumorogenesis involves dramatic accumulation and abnormal spreading of p63-positive basal cells, and of stem cell antigen-1-positive cells identified as a stem/progenitor-like subpopulation. Because basal epithelial stem cells are proposed to serve as tumor-initiating cells, we challenged the relevance of local PRL as a previously unexplored therapeutic target. Using a double-transgenic approach, we show that Delta1-9-G129R-hPRL, a competitive PRL-receptor antagonist, prevented early stages of prostate tumorogenesis by reducing or inhibiting Stat5 activation, cell proliferation, abnormal basal-cell pattern, and frequency or grade of intraepithelial neoplasia. This study identifies PRL receptor/Stat5 as a unique pathway, initiating prostate tumorogenesis by altering basal-/stem-like cell subpopulations, and strongly supports the importance of further developing strategies to target locally overexpressed PRL in human prostate cancer.