While chromosomal translocations have a fundamental role in the development of several human leukaemias, their role in solid tumour development has been somewhat more controversial. Recently, it was shown that up to 80% of prostate tumours harbour at least one such gene fusion, and that the most common fusion event, between the prostate-specific TMPRSS2 gene and the ERG oncogene, is a critical, and probably early factor in prostate cancer development. Here we demonstrate the presence and expression of this significant chromosomal rearrangement in prostate cancer stem cells. Moreover, we show that in the prostate epithelial hierarchy from both normal and tumour tissues, TMPRSS2 transcription is subjected to tight monoallelic regulation, which is retained upon asymmetric division and relaxed during epithelial cell differentiation. The presence and expression of TMPRSS2/ERG in prostate stem cells would provide ERG-driven survival advantages, allowing maintenance of this mutated genotype.