A key issue in cancer biology is whether oncogenic transformation of different cell types of origin within an adult tissue gives rise to distinct tumour subtypes that differ in their prognosis and/or treatment response. We now show that initiation of prostate tumours in basal or luminal epithelial cells in mouse models results in tumours with distinct molecular signatures that are predictive of human patient outcomes. Furthermore, our analysis of untransformed basal cells reveals an unexpected assay dependence of their stem cell properties in sphere formation and transplantation assays versus genetic lineage tracing during prostate regeneration and adult tissue homeostasis. Although oncogenic transformation of basal cells gives rise to tumours with luminal phenotypes, cross-species bioinformatic analyses indicate that tumours of luminal origin are more aggressive than tumours of basal origin, and identify a molecular signature associated with patient outcome. Our results reveal the inherent plasticity of basal cells, and support a model in which different cells of origin generate distinct molecular subtypes of prostate cancer.