Disseminated prostate cancer (PCa) cells in the marrow survive for years without evidence of proliferation, while maintaining the capacity to develop into metastatic lesions. These dormant disseminated tumor cells (DTCs) may reside in close proximity to osteoblasts, while expressing high levels of Axl, one of the tyrosine kinase receptors for growth arrest specific 6 (Gas6). Yet how Axl regulates DTC proliferation in marrow remains undefined. Here, we explored the impact of the loss of Axl in PCa cells (PC3 and DU145) on the induction of their dormancy when they are co-cultured with a pre-osteoblastic cell line, MC3T3-E1. MC3T3-E1 cells dramatically decrease the proliferation of PCa cells, however this suppressive effect of osteoblasts is significantly reduced by the reduction of Axl expression in PCa cells. Interestingly, expression of both TGF-β and its receptors were regulated by Axl expression in PCa cells, while specific blockade of TGF-β signaling limited the ability of the osteoblasts to induce dormancy of PCa cells. Finally, we found that both Gas6 and Axl are required for TGF-β2-mediated cell growth suppression. Taken together, these data suggest that a loop between the Gas6/Axl axis and TGF-β2 signaling plays a significant role in the induction of PCa cell dormancy.