The spatial two-tissue compartment model (2TCM) was used to analyze prostate dynamic contrast enhanced (DCE) MRI data and compared with the standard Tofts model. A total of 29 patients with biopsy-confirmed prostate cancer were included in this IRB-approved study. MRI data were acquired on a Philips Achieva 3T-TX scanner. After T2-weighted and diffusion-weighted imaging, DCE data using 3D T1-FFE mDIXON sequence were acquired pre- and post-contrast media injection (0.1 mmol/kg Multihance) for 60 dynamic scans with temporal resolution of 8.3 s/image. The 2TCM has one fast (K1transkep1K2transkep2K1transkep1K1trans and K1transkep1K2transkep2K1transkep1K1trans) and one slow (K1transkep1K2transkep2K1transkep1K1trans and K1transkep1K2transkep2K1transkep1K1trans) exchanging compartment, compared with the standard Tofts model parameters (Ktrans and kep). On average, prostate cancer had significantly higher values (p < 0.01) than normal prostate tissue for all calculated parameters. There was a strong correlation (r = 0.94, p < 0.001) between Ktrans and K1transkep1K2transkep2K1transkep1K1trans for cancer, but weak correlation (r = 0.28, p < 0.05) between kep and K1transkep1K2transkep2K1transkep1K1trans. Average root-mean-square error (RMSE) in fits from the 2TCM was significantly smaller (p < 0.001) than the RMSE in fits from the Tofts model. Receiver operating characteristic (ROC) analysis showed that fast K1transkep1K2transkep2K1transkep1K1trans had the highest area under the curve (AUC) than any other individual parameter. The combined four parameters from the 2TCM had a considerably higher AUC value than the combined two parameters from the Tofts model. The 2TCM is useful for quantitative analysis of prostate DCE-MRI data and provides new information in the diagnosis of prostate cancer.