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Levels of caveolin-1 (Cav-1) in tumour epithelial cells increase during prostate cancer progression. Conversely, Cav-1 expression in the stroma can decline in advanced and metastatic prostate cancer. In a large cohort of 724 prostate cancers, we observed significantly decreased levels of stromal Cav-1 in concordance with increased Gleason score (p =0.012). Importantly, reduced expression of Cav-1 in the stroma correlated with reduced relapse-free survival (p =0.009), suggesting a role for stromal Cav-1 in inhibiting advanced disease. Silencing of Cav-1 by shRNA in WPMY-1 prostate fibroblasts resulted in up-regulation of Akt phosphorylation, and significantly altered expression of genes involved in angiogenesis, invasion, and metastasis, including a > 2.5-fold increase in TGF-β1 and γ-synuclein (SNCG) gene expression. Moreover, silencing of Cav-1 induced migration of prostate cancer cells when stromal cells were used as attractants. Pharmacological inhibition of Akt caused down-regulation of TGF-β1 and SNCG, suggesting that loss of Cav-1 in the stroma can influence Akt-mediated signalling in the tumour microenvironment. Cav-1-depleted stromal cells exhibited increased levels of intracellular cholesterol, a precursor for androgen biosynthesis, steroidogenic enzymes, and testosterone. These findings suggest that loss of Cav-1 in the tumour microenvironment contributes to the metastatic behaviour of tumour cells by a mechanism that involves up-regulation of TGF-β1 and SNCG through Akt activation. They also suggest that intracrine production of androgens, a process relevant to castration resistance, may occur in the stroma. Copyright © 2013 Pathological Society of Great Britain and Ireland. Published by John Wiley & Sons, Ltd.