The Centers for Medicare and Medicaid says the biotech drug met its criteria as a "reasonable and necessary" medicine. That paves the way for thousands of men to receive the drug through the federal government.
The agency will take comments for 90 days before making the decision final.
Medicare is prohibited from considering cost when deciding whether to pay for a new treatment. But the agency's decision to review Provenge prompted outrage from some patients and doctors who said the agency was looking for a reason to avoid reimbursing for the drug.
With government reimbursement, analysts expect Provenge to reach over $1 billion in sales.