Analysis of next generation transcriptome sequencing data of prostate cancer identified a novel gene fusion formed by the fusion of a protein coding gene (KLK4) with a non-coding pseudogene (KLKP1) and expression of its cognate protein. Screening of 659 prostate cancer TMA showed about 32% of positive cases predominantly expressed in higher Gleason grade tumors. Concomitant expression with ERG but not with SPINK1 and other ETS fusion positive tumors. Fusion gene expression potentially regulated by AR and ERG. Antibody specific to the KLK4-KLKP1 fusion protein was validated by immunohistochemistry and western blot methods. Oncogenic properties were validated by in vitro and in vivo functional studies. Clinical data analysis shows significant association with prostate cancer in young men and overall survival analysis indicate favorable prognosis. Non-invasive detection in urine samples has been confirmed. Taken together, we present a novel biomarker for routine screening of high Gleason grade prostate cancer at diagnosis.\n\nSIGNIFICANCEWe discovered and validated a novel prostate cancer (PCa) specific fusion gene involving a protein coding (KLK4) and a pseudogene (KLKP1) and its cognate protein. The unique feature of this fusion gene is the conversion of the noncoding pseudogene into a protein coding gene and its unique expression only in about 30% of high Gleason grade PCa. Expression of this gene is found to be concomitant in ERG fusion positive prostate cancer but mutually exclusive with SPINK1, ETV1, ETV4 and ETV5 positive tumors. Like other ETS family gene fusions, KLK4-KLKP1 can be detected in the urine samples of patients with prostate cancer enabling non-invasive detection of high Gleason grade prostate cancer. Given the unique feature of this fusion oncogenic potential, high Gleason grade specific expression and noninvasive detection, this novel gene fusion has a potential to be used as a biomarker for early detection of high-grade prostate cancer and a therapeutic target.