Glial cell line-derived neurotrophic factor (GDNF) is a TGFβ family member, and GDNF signals through a glycosyl-phosphatidylinositol-linked cell surface receptor (GFRα1) and RET receptor tyrosine kinase. GDNF signaling plays crucial roles in urogenital processes, ranging from cell fate decisions in germline progenitors to ureteric bud outgrowth and renal branching morphogenesis. Gene ablation studies in mice have revealed essential roles for GDNF signaling in urogenital development, although its role in prostate development is unclear. We investigated the functional role of GDNF signaling in the urogenital sinus (UGS) and the developing prostate of mice. GDNF, GFRα1, and RET show time-specific and cell-specific expression during prostate development in vivo. In the UGS, GDNF and GFRα1 are expressed in the urethral mesenchyme (UrM) and epithelium (UrE), whereas RET is restricted to the UrM. In each lobe of the developing prostate, GDNF and GFRα1 expression declines in the epithelium and becomes restricted to the stroma. Using a well-established organ culture system, we determined that exogenous GDNF increases proliferation of UrM and UrE cells, altering UGS morphology. With regard to mechanism, GDNF signaling in the UrM increased RET expression and phosphorylation of ERK1/2. Furthermore, inhibition of RET kinase activity or ERK kinases suppressed GDNF-induced proliferation of UrM cells but not UrE cells. We therefore propose that GDNF signaling in the UGS increases proliferation of UrM and UrE cells by different mechanisms, which are distinguished by the role of RET receptor tyrosine kinase and ERK kinase signaling, thus implicating GDNF signaling in prostate development and growth.