An in depth analysis of prostate cancer prostatectomy samples which over-express the ERG oncogene led to the discovery of a novel gene translocation in prostate cancer, between the NDRG1 gene (N-myc downstream regulated gene 1) on chromosome 8 and the ERG oncogene on chromosome 21, leading to the expression of a chimeric NDRG1-ERG protein. Methods and compositions useful for diagnosing and treating prostate cancer characterized by NDRG1-ERG fusion are described.