CD44 is a marker of cancer stem cell (CSC) in many types of tumors. Alternative splicing of its 20 exons generates various CD44 isoforms that have different tissue specific expression and functions, including the CD44 standard isoform (CD44s) encoded by the constant exons and the CD44 variant isoforms (CD44v) with variant exon insertions. Switching between the CD44v and CD44s isoforms plays pivotal roles in tumor progression. Here we reported a novel mechanism of CD44 alternative splicing induced by TGF-β1 and its connection to enhanced epithelial-to-mesenchymal transition (EMT) and stemness in human prostate cancer cells. TGF-β1 treatment increased the expression of CD44s and N-cadherin while decreased the expression of CD44v and E-cadherin in DU-145 prostate cancer cells. Other EMT markers and cancer stem cell markers were also upregulated after TGF-β1 treatment. RNAi knockdown of CD44 reversed the phenotype, which could be rescued by overexpressing CD44s but not CD44v, indicating the alternatively spliced isoform CD44s mediated the activity of TGF-β1 treatment. Mechanistically, TGF-β1 treatment induced the phosphorylation, poly-ubiquitination, and degradation of PCBP1, a well-characterized RNA binding protein known to regulate CD44 splicing. RNAi knockdown of PCBP1 was able to mimic TGF-β1 treatment to increase the expression of CD44s, as well as the EMT and cancer stem cell markers. In vitro and in vivo experiments were performed to show that CD44s promoted prostate cancer cell migration, invasion, and tumor initiation. Taken together, we defined a mechanism by which TGF-β1 induces CD44 alternative splicing and promotes prostate cancer progression.