Deletions involving the chromosomal band 5q21 are among the most frequent alterations in prostate cancer. Using single-nucleotide polymorphism (SNP) arrays, we mapped a 1.3 megabase minimally deleted region including only the repulsive guidance molecule B (RGMB) and chromodomain helicase DNA-binding protein 1 (CHD1) genes. Functional analyses showed that CHD1 is an essential tumor suppressor. FISH analysis of 2,093 prostate cancers revealed a strong association between CHD1 deletion, prostate-specific antigen (PSA) biochemical failure (P = 0.0038), and absence of ERG fusion (P < 0.0001). We found that inactivation of CHD1 in vitro prevents formation of ERG rearrangements due to impairment of androgen receptor (AR)-dependent transcription, a prerequisite for ERG translocation. CHD1 is required for efficient recruitment of AR to responsive promoters and regulates expression of known AR-responsive tumor suppressor genes, including NKX3-1, FOXO1, and PPARγ. Our study establishes CHD1 as the 5q21 tumor suppressor gene in prostate cancer and shows a key role of this chromatin remodeling factor in prostate cancer biology.