High aldehyde dehydrogenase (ALDH) activity can be used to identify tumor-initiating and metastasis-initiating cells in various human carcinomas, including prostate cancer. To date, the functional importance of ALDH enzymes in prostate carcinogenesis, progression and metastasis has remained elusive. Previously we identified strong expression of ALDH7A1 in human prostate cancer cell lines, primary tumors and matched bone metastases. In this study, we evaluated whether ALDH7A1 is required for the acquisition of a metastatic stem/progenitor cell phenotype in human prostate cancer. Knockdown of ALDH7A1 expression resulted in a decrease of the α2hi/αvhi/CD44+ stem/progenitor cell subpopulation in the human prostate cancer cell line PC-3M-Pro4. In addition, ALDH7A1 knockdown significantly inhibited the clonogenic and migratory ability of human prostate cancer cells in vitro. Furthermore, a number of genes/factors involved in migration, invasion and metastasis were affected including transcription factors (snail, snail2, and twist) and osteopontin, an ECM molecule involved in metastasis. Knockdown of ALDH7A1 resulted in decreased intra-bone growth and inhibited experimentally induced (bone) metastasis, while intra-prostatic growth was not affected. In line with these observations, evidence is presented that TGF-β, a key player in cancer invasiveness and bone metastasis, strongly induced ALDH activity while BMP7 (an antagonist of TGF-β signaling) down-regulated ALDH activity. Our findings show, for the first time, that the ALDH7A1 enzyme is functionally involved in the formation of bone metastases and that the effect appeared dependent on the microenvironment, i.e., bone versus prostate.