Prostate development depends on balanced cell proliferation and differentiation, and acetylated KLF5 is known to alter epithelial proliferation. It remains elusive whether post-translational modifications of transcription factors can differentially determine adult stem/progenitor cell fate. Here we report that, in human and mouse prostates, Klf5 is expressed in both basal and luminal cells, with basal cells preferentially expressing acetylated Klf5. Functionally, Klf5 is indispensable for maintaining basal progenitors, their luminal differentiation, and the proliferation of their basal and luminal progenies. Acetylated Klf5 is also essential for basal progenitors' maintenance and proper luminal differentiation, as deacetylation of Klf5 causes excess basal-to-luminal differentiation; attenuates androgen-mediated organoid organization; and retards postnatal prostate development. In basal progenitor-derived luminal cells, Klf5 deacetylation increases their proliferation and attenuates their survival and regeneration following castration and subsequent androgen restoration. Mechanistically, Klf5 deacetylation activates Notch signaling. Klf5 and its acetylation thus contribute to postnatal prostate development and regeneration by controlling basal progenitor cell fate.