Recent lineage tracing studies support the existence of prostate luminal progenitors that possess extensive regenerative capacity, but their identity remains unknown. We show that Sca-1 (stem cell antigen-1) identifies a small population of murine prostate luminal cells that reside in the proximal prostatic ducts adjacent to the urethra. Sca-1⁺ luminal cells do not express Nkx3.1. They do not carry the secretory function, although they express the androgen receptor. These cells are enriched in the prostates of castrated mice. In the in vitro prostate organoid assay, a small fraction of the Sca-1⁺ luminal cells are capable of generating budding organoids that are morphologically distinct from those derived from other cell lineages. Histologically, this type of organoid is composed of multiple inner layers of luminal cells surrounded by multiple outer layers of basal cells. When passaged, these organoids retain their morphological and histological features. Finally, the Sca-1⁺ luminal cells are capable of forming small prostate glands containing both basal and luminal cells in an in vivo prostate regeneration assay. Collectively, our study establishes the androgen-independent and bipotent organoid-forming Sca-1⁺ luminal cells as a functionally distinct cellular entity. These cells may represent a putative luminal progenitor population and serve as a cellular origin for castration resistant prostate cancer.