Multi-drug resistance (MDR)-ATP binding cassette (ABC) transporters, ABCB1, ABCC1, and ABCG2 participate in the efflux of steroid hormones, estrogens, and androgens, which regulate prostate development and differentiation. The role of MDR-ABC efflux transporters in prostate epithelial proliferation and differentiation remains unclear. We hypothesized that MDR-ABC transporters regulate prostate differentiation and epithelium regeneration. Prostate epithelial differentiation was studied using histology, sphere formation assay, and prostate regeneration induced by cycles of repeated androgen withdrawal and replacement. Embryonic deletion of Abcg2 resulted in a decreased number of luminal cells in the prostate and increased sphere formation efficiency, indicating an imbalance in the prostate epithelial differentiation pattern. Decreased luminal cell number in the Abcg2 null prostate implies reduced differentiation. Enhanced sphere formation efficiency in Abcg2 null prostate cells implies activation of the stem/progenitor cells. Prostate regeneration was associated with profound activation of the stem/progenitor cells, indicating the role of Abcg2 in maintaining stem/progenitor cell pool. Since embryonic deletion of Abcg2 may result in compensation by other ABC transporters, pharmacological inhibition of MDR-ABC efflux was performed. Pharmacological inhibition of MDR-ABC efflux enhanced prostate epithelial differentiation in sphere culture and during prostate regeneration. In conclusion, Abcg2 deletion leads to activation of the stem/progenitor cells and enhances differentiating divisions; and pharmacological inhibition of MDR-ABC efflux leads to epithelial differentiation. Our study demonstrates for the first time that MDR-ABC efflux transporter inhibition results in enhanced prostate epithelial cell differentiation.