KLF5 is a basic transcription factor that regulates multiple biological processes. While it was identified as a putative tumor suppressor in prostate cancer, likely due to its function as an effector of TGF-β in the inhibition of cell proliferation, KLF5 is unacetylated and promotes cell proliferation in the absence of TGF-β. In this study, we evaluated the expression and function of KLF5 in prostatic epithelial homeostasis and tumorigenesis using mouse prostates and human prostate epithelial cells in 3-D culture. Histological and molecular analyses demonstrated that unacetylated-Klf5 was expressed in basal or undifferentiated cells, whereas acetylated-Klf5 was expressed primarily in luminal and/or differentiated cells. Androgen depletion via castration increased both the level of Klf5 expression and the number of Klf5-positive cells in the remaining prostate. Functionally, knockdown of KLF5 in the human RWPE-1 prostate cell line decreased the number of spheres formed in 3-D culture. In addition, knockout of Klf5 in prostate epithelial cells, mediated by probasin promoter-driven Cre expression, did not cause neoplasia but promoted cell proliferation and induced hyperplasia when one Klf5 allele was knocked out. Knockout of both Klf5 alleles however, caused apoptosis rather than cell proliferation in the epithelium. In castrated mice, knockout of Klf5 resulted in more severe shrinkage of the prostate. These results suggest that KLF5 plays a role in the proliferation and differentiation of prostatic epithelial cells, yet loss of KLF5 alone is insufficient to induce malignant transformation in epithelial cells.