SAM-pointed domain-containing ETS transcription factor (SPDEF) is expressed in normal prostate epithelium. While its expression changes during prostate carcinogenesis (PCa), the role of SPDEF in prostate cancer remains controversial due to the lack of genetic mouse models. In present study, we generated transgenic mice with the loss- or gain-of-function of SPDEF in prostate epithelium to demonstrate that SPDEF functions as tumor suppressor in prostate cancer. Loss of SPDEF increased cancer progression and tumor cell proliferation, whereas over-expression of SPDEF in prostate epithelium inhibited carcinogenesis and reduced tumor cell proliferation in vivo and in vitro. Transgenic over-expression of SPDEF inhibited mRNA and protein levels of Foxm1, a transcription factor critical for tumor cell proliferation, and reduced expression of Foxm1 target genes, including Cdc25b, Cyclin B1, Cyclin A2, Plk-1, AuroraB, CKS1 and Topo2alpha. Deletion of SPDEF in transgenic mice and cultures prostate tumor cells increased expression of Foxm1 and its target genes. Furthermore, an inverse correlation between SPDEF and Foxm1 levels was found in human prostate cancers. The two-gene signature of low SPDEF and high FoxM1 predicted poor survival in prostate cancer patients. Mechanistically, SPDEF bound to, and inhibited transcriptional activity of Foxm1 promoter by interfering with the ability of Foxm1 to activate its own promoter through auto-regulatory site located in the −745/−660 bp Foxm1 promoter region. Re-expression of Foxm1 restored cellular proliferation in the SPDEF-positive cancer cells and rescued progression of SPDEF-positive tumors in mouse prostates. Altogether, SPDEF inhibits prostate carcinogenesis by preventing Foxm1-regulated proliferation of prostate tumor cells. The present study identified novel crosstalk between SPDEF tumor suppressor and Foxm1 oncogene and demonstrated that this crosstalk is required for tumor cell proliferation during progression of prostate cancer in vivo.