The ‘paired’-like homeodomain transcription factor Prop1 is essential for the expansion of the pituitary primordia and for the differentiation and/or function of the hormone-producing cells of the anterior pituitary gland. Prop1 expression is normally extinguished before transcription of most differentiation markers is initiated. We report that constitutive expression of Prop1 interferes with anterior pituitary cell differentiation and increases the susceptibility for pituitary tumors. The terminal differentiation of pituitary gonadotropes is delayed, resulting in transient hypogonadism and a delay in the onset of puberty. Thyrotrope differentiation occurs normally, but thyrotrope function is impaired resulting in mild hypothyroidism. Aged mice exhibit defects consistent with misregulation of pituitary cell proliferation, including adenomatous hyperplasia with the formation of Rathke’s cleft cysts and tumors. Thus, silencing Prop1 is important for normal pituitary development and function. These data suggest that gain-of-function mutations in PROP1 could contribute to the most common human pituitary endocrinopathies and tumors.