Simple Summary Prostate cancer (PCa) is the second most common malignancy in males globally. Although PSA screening is a milestone in PCa detection, it also causes overdiagnosis and subsequent overtreatment. Therefore, it is imperative to find an optimal replacement or supplement for PSA testing to increase the detection rate of clinically significant PCa as well as reduce unnecessary biopsies. Here, we aimed at developing and validating a novel noninvasive urinary exosome-based post-DRE lncRNA assay to diagnose PCa and clinically significant PCa at initial prostate biopsy. We found that the lncRNA assay had a significant clinical value in diagnosing PCa and clinically significant PCa compared to the current clinical parameters. These results suggest that this novel lncRNA assay developed in this study could be a valuable biomarker to increase the detection rate of clinically significant PCa as well as reduce unnecessary biopsies. Purpose: This study aimed at developing and validating a novel noninvasive urinary exosome-based post-DRE (digital rectal examination) lncRNA assay to diagnose PCa (prostate cancer) and clinically significant PCa (Gleason score >= 7) from the initial prostate biopsy. Methods: A total of 602 urine samples from eligible participants were collected. The expression levels of urinary exosomal PCA3 (prostate cancer antigen 3) and MALAT1 (metastasis-associated lung adenocarcinoma transcript 1) were detected by qPCR (quantitative real-time PCR). Receiver operating characteristic (ROC) analysis was applied to evaluate the diagnostic performance of PCA3, MALAT1 and the lncRNA assay. A decision curve analysis (DCA) and waterfall plots were used to assess the clinical value of the lncRNA assay. Results: Urinary exosomal PCA3 and MALAT1 were overexpressed in PCa and clinically significant PCa (p < 0.001). The lncRNA assay combining PCA3 and MALAT1 had a better diagnostic performance (AUC 0.828) than the current clinical parameters in detecting PCa. More importantly, the lncRNA assay yielded an AUC of 0.831 to detect clinically significant PCa, which is much higher than that of the current clinical parameters. The lncRNA assay was superior to PSA, f/tPSA and the base model for detecting PCa and clinically significant PCa, with a higher net benefit for almost all threshold probabilities. At the cutoff value of 95% sensitivity, the lncRNA assay could avoid 24.2% unnecessary biopsies while only missing 1.2% of the cases of clinically significant PCa. Conclusion: We developed and validated a novel noninvasive post-DRE urine-based lncRNA assay that presented good diagnostic power and clinical utility for the early diagnosis of PCa and high-grade PCa.