The mouse haematopoietic stem cell (SC) regulator Latexin (LXN) is the only known homologue of the retinoic acid receptor responder 1 (RARRES1) gene. Both genes lie adjacent on chromosome 3 and differ mostly by the presence of a transmembrane domain in RARRES1. Despite their homology, it is not known whether they possess similar regulatory mechanisms, cellular localization and function. Here, we identified RARRES1 and LXN as highly significantly downregulated genes in human prostate SCs, whose expression was induced by the pro-differentiation agent all-trans retinoic acid (atRA). AtRA induced expression in the most differentiated cells compared with the SC fraction, suggesting that this subpopulation was less responsive to atRA. Small interfering RNA suppression of RARRES1 and LXN enhanced the SC properties of primary prostate cultures, as shown by a significant increase in their colony-forming ability. Expression of both RARRES1 and LXN was co-ordinately repressed by DNA methylation in prostate cancer cell lines and inhibition of RARRES1 and LXN increased the invasive capacity of primary prostate cultures, which also fully rescued an inhibitory effect induced by atRA. Moreover, we showed that RARRES1 and LXN reside within different sub-cellular compartments, providing evidence that RARRES1 is not a plasma membrane protein as previously supposed but is located primarily in the endoplasmic reticulum; whereas LXN was detected in the nucleus of prostate epithelial cells. Thus, LXN and RARRES1 are potential tumour suppressor genes, which are co-ordinately regulated, SC-silenced genes functioning to suppress invasion and colony-forming ability of prostate cancer cells; yet the proteins reside within different sub-cellular compartments.