Esophageal squamous cell carcinoma (ESCC) is an aggressive malignancy; its mechanisms of development and progression are poorly understood. By high-throughput transcriptome sequencing (RNA-Seq) profiling of three pairs of primary ESCCs and their corresponding non-tumorous tissues, we identified that prostate stem cell antigen (PSCA), a gene that encodes a glycosylphosphatidylinositol-anchored protein, is significantly downregulated in ESCC. Here, we reported decreased expression of PSCA in 188/218 (86.2%) of primary ESCC cases and was negatively regulated by its transcription factor sex-determining region Y-box5 that was significantly associated with the poor differentiation (P = 0.003), increased lymph node metastasis (P < 0.0001), advanced stage (P = 0.007), and disease-specific survival (P < 0.0001), but not associated with the recently reported transcrible rs2294008 (C > T) polymorphism in ESCC. Functional studies showed that PSCA could arrest cell cycle progression and promote cell differentiation independent of the start codon polymorphism. Further mechanistic studies revealed that retinoblastoma 1-inducible coiled-coil 1 (RB1CC1), a key signaling node to regulate cellular proliferation and differentiation, interacted specifically with PSCA in ESCC cells. Binding of PSCA and RB1CC1 in cytoplasm resulted in stabilization and translocation of RB1CC1 into nucleus, thereby activating key factors involved in cell cycle arrest and differentiation. Collectively, our data provide a novel molecular mechanism for the tumor suppressor role of PSCA and may help design effective therapy targeting PSCA–RB1CC1 pathway to control esophageal cancer growth and differentiation.