Acetylation of the histone variant H2A.Z (H2A.Zac) occurs at active promoters and is associated with oncogene activation in prostate cancer, but its role in enhancer function is still poorly understood. Here we show that H2A.Zac containing nucleosomes are commonly redistributed to neo-enhancers in cancer resulting in a concomitant gain of chromatin accessibility and ectopic gene expression. Notably incorporation of acetylated H2A.Z nucleosomes is a pre-requisite for activation of Androgen receptor (AR) associated enhancers. H2A.Zac nucleosome occupancy is rapidly remodelled to flank the AR sites to initiate the formation of nucleosome-free regions and the production of AR-enhancer RNAs upon androgen treatment. Remarkably higher levels of global H2A.Zac correlate with poorer prognosis. Together these data demonstrate the novel contribution of H2A.Zac in activation of newly formed enhancers in prostate cancer.