Retinoids are a class of compounds derived from the metabolism of vitamin A and β-carotene. Retinoid signaling has vital functions in both vertebrate and invertebrate embryogenesis such as the formation of body axes and the control of organogenesis. Genetic evidence suggests a role of retinoids in cell fate decision, maturation and homeostasis of the prostate epithelium. Knockout (KO) of the retinoic acid receptor gamma (RARG) gene in mice leads to growth deficits and male sterility due to squamous metaplasia and keratinization of the seminal vesicles and prostate. Noteworthy, synergistic antitumor effects of retinoids and vitamin D have been described in prostate cancer cell lines, although a mechanistic link between retinoic acid (RA) signaling and prostate epithelium differentiation and tumorigenesis has not yet been elucidated. Here, taking advantage of mouse prostate organoids (mPrOs), we report an essential role for RA in the differentiation and integrity of the periurethral and proximal luminal compartments of the prostate epithelium. Mechanistically, RA, through the activation of RARγ, promotes the expression of Foxa1, a pioneer transcription factor that cooperates with androgen receptor (AR) in directing progenitor cells towards the luminal lineage. Reduced RA signaling in organoids leads to downregulation of key structural and polarity proteins along with a loss of luminal identity, a phenotype that is fully rescued by constitutive expression of exogenous Foxa1. Overall, our study demonstrates the importance of RA signaling in prostate epithelium differentiation and homeostasis. In addition to the tumorigenic role of Foxa1 mutations recently described in several human cancers, alteration in RA pathway due to altered uptake/absorption/metabolism of vitamin A and β-carotene, or depending on specific molecular dysfunctions (e.g., epigenetic RARB silencing), could represent a critical rheostat for prostate tumorigenesis.