Loss of IQGAP2 contributes to the tumorigenesis of hepatocellular carcinoma and gastric cancer. However, whether IQGAP2 also suppresses prostate tumorigenesis remains unclear. We report here that IQGAP2 is a candidate tumour suppressor of prostate cancer (PC). Elevated IQGAP2 was detected in prostatic intraepithelial neoplasia (PIN), early stages of PCs (Gleason score ≤3), and androgen-dependent LNCaP PC cells. However, IQGAP2 was expressed at substantially reduced levels not only in prostate glands and non-tumorigenic BPH-1 prostate epithelial cells but also in advanced (Gleason score 4 or 5) and androgen-independent PCs. Furthermore, xenograft tumours that were derived from stem-like DU145 cells displayed advanced features and lower levels of IQGAP2 in comparison to xenograft tumours that were produced from non stem-like DU145 cells. Collectively, these results suggest that IQGAP2 functions in the surveillance of prostate tumorigenesis. Consistent with this concept, ectopic IQGAP2 reduced the proliferation of DU145, PC3, and 293T cells as well as the invasion ability of DU145 cells. While ectopic IQGAP2 up-regulated E-cadherin in DU145 and PC3 cells, knockdown of IQGAP2 reduced E-cadherin expression. In primary PC and DU145 cells-derived xenograft tumours, the majority of tumours with high levels of IQGAP2 were strongly-positive for E-cadherin. Therefore, IQGAP2 may suppress PC tumorigenesis, at least in part, by up-regulation of E-cadherin. Mechanistically, overexpression of IQGAP2 significantly reduced AKT activation in DU145 cells and inhibition of AKT activation upregulated E-cadherin, suggesting that IQGAP2 increases E-cadherin expression by inhibiting AKT activation. Taken together, we demonstrate here that IQGAP2 is a candidate tumour suppressor of PC.