Aberrant transforming growth factor-β (TGF-β) signaling is a hallmark of the stromal microenvironment in cancer. Dickkopf-3 (Dkk-3), shown to inhibit TGF-β signaling, is downregulated in prostate cancer and upregulated in the stroma in benign prostatic hyperplasia, but the function of stromal Dkk-3 is unclear. Here we show that DKK3 silencing in WPMY-1 prostate stromal cells increases TGF-β signaling activity and that stromal cell-conditioned media inhibit prostate cancer cell invasion in a Dkk-3-dependent manner. DKK3 silencing increased the level of the cell-adhesion regulator TGF-β-induced protein (TGFBI) in stromal and epithelial cell-conditioned media, and recombinant TGFBI increased prostate cancer cell invasion. Reduced expression of Dkk-3 in patient tumors was associated with increased expression of TGFBI. DKK3 silencing reduced the level of extracellular matrix protein-1 (ECM-1) in prostate stromal cell-conditioned media but increased it in epithelial cell-conditioned media, and recombinant ECM-1 inhibited TGFBI-induced prostate cancer cell invasion. Increased ECM1 and DKK3 mRNA expression in prostate tumors was associated with increased relapse-free survival. These observations are consistent with a model in which the loss of Dkk-3 in prostate cancer leads to increased secretion of TGFBI and ECM-1, which have tumor-promoting and tumor-protective roles, respectively. Determining how the balance between the opposing roles of extracellular factors influences prostate carcinogenesis will be key to developing therapies that target the tumor microenvironment.