A major genomic alteration in prostate cancer (PCa) is frequent loss of chromosome (chr) 8p with a common region of loss of heterozygosity (LOH) at chr8p22 locus. Genomic studies implicate this locus in the initiation of clinically significant PCa and with progression to metastatic disease. However, the genes within this region have not been fully characterized to date. Here we demonstrate for the first time that a microRNA component of this region—miR-383—is frequently downregulated in prostate cancer, has a critical role in determining tumor-initiating potential and is involved in prostate cancer metastasis via direct regulation of CD44, a ubiquitous marker of PCa tumor-initiating cells (TICs)/stem cells. Expression analyses of miR-383 in PCa clinical tissues established that low miR-383 expression is associated with poor prognosis. Functional data suggest that miR-383 regulates PCa tumor-initiating/stem-like cells via CD44 regulation. Ectopic expression of miR-383 inhibited tumor-initiating capacity of CD44+ PCa cells. Also, ‘anti-metastatic’ effects of ectopic miR-383 expression were observed in a PCa experimental metastasis model. In view of our results, we propose that frequent loss of miR-383 at chr8p22 region leads to tumor initiation and prostate cancer metastasis. Thus, we have identified a novel finding that associates a long observed genomic alteration to PCa stemness and metastasis. Our data suggest that restoration of miR-383 expression may be an effective therapeutic modality against PCa. Importantly, we identified miR-383 as a novel PCa tissue diagnostic biomarker with a potential that outperforms that of serum PSA.