Prostate epithelium develops from multipotent stem cells, which are replaced in adult life by different lineage-restricted basal and luminal unipotent stem cells. Deletion of Pten re-induces multipotency in basal cells (BCs); however, the molecular mechanisms regulating BC plasticity and tumor initiation are poorly understood. Here we showed that Pten deletion in BCs led to distinct cell fate reprogramming and tumor initiation in a regionalized manner. Single-cell RNA sequencing, ATAC-seq and in situ characterization revealed that following Pten deletion in anterior and dorsolateral prostates, BCs were highly plastic and reprogrammed into a hillock-like state, progressing into a proximal-like luminal state before giving rise to invasive tumors. This BC reprogramming was associated with the activation of innate immunity. Pharmacological targeting of interleukin-1, JAK–STAT and NF-κB as well as genetic deletion of Nfkb inhibit Pten-induced cell plasticity and reprogramming in a cellular autonomous manner, opening new opportunities for prevention and treatment of prostate cancer.