Prostate cancer is the most common malignancy in men in developed countries. Overexpression of enhancer of zeste homolog 2 (EZH2), the major histone H3 lysine 27 methyltransferase, has been connected to prostate cancer malignancy. However, its downstream genes and pathways have not been well established. Here, we show tumor suppressor Hepatocyte Nuclear Factor 1β (HNF1B) as a direct downstream target of EZH2. EZH2 binds HNF1B locus and suppresses HNF1B expression in prostate cancer cell lines, which is further supported by the reverse correlation between EZH2 and HNF1B expression in clinical samples. Consistently, restored HNF1B expression significantly suppresses EZH2-mediated overgrowth and EMT processes, including migration and invasion of prostate cancer cell lines. Mechanistically, we find that HNF1B primarily binds the promoters of thousands of target genes, and differentially regulates the expression of 876 genes. We also identify RBBP7/RbAP46 as a HNF1B interacting protein which is required for HNF1B-mediated repression of SLUG expression and EMT process. Importantly, we find that higher HNF1B expression strongly predicts better prognosis of prostate cancer, alone or together with lower EZH2 expression. Taken together, we have established a previously underappreciated axis of EZH2-HNF1B-SLUG in prostate cancer, and also provide evidence supporting HNF1B as a potential prognosis marker for metastatic prostate cancer.