Recent studies have introduced prosaposin (PSAP) as a pleiotrophic growth factor for prostate cancer (PCa). We have previously reported that PSAP or one of its known active molecular derivatives, saposin C functions as an androgen-agonist and androgen-regulated gene (ARG) for androgen-sensitive (AS) PCa cell lines. Due to the potential significance of androgen receptor (AR)-expressing stroma in PCa, we evaluated a possible bi-directional paracrine regulatory interactions between DHT and PSAP in AR-positive prostate stromal (PrSt) cells. We report that saposin C in a ligand-independent manner increased AR expression, its nuclear content, and tyrosine phosphorylation. DHT treatment of PrSt cells increased PSAP expression. We also demonstrated both serum- and androgen-inducibility of a previously characterized hormone-responsive element (HRE) located in the proximal region of PSAP promoter. In addition, conditioned-media derived from PrSt cells and bone fibroblasts (i.e., MSF) differentially increased PSAP-promoter activity in androgen-independent (AI) PC-3 and AS LNCaP cells. Our data for the first time demonstrate that not only saposin C or PSAP regulates AR expression/activity, but also function as an ARG in PrSt. Ligand-independent activation of AR by PSAP or saposin C in PCa and stromal cells may contribute not only to prostate carcinogenesis at an early stage, but also in AI progression of the disease in an androgen-deprived tumor microenvironment.