Signaling pathways enabling transforming growth factor-beta (TGFbeta)'s conversion from a tumor suppressor to a tumor promoter are not well characterized. TGFbeta utilizes intracellular SMADs to mediate growth suppression; however, TGFbeta-induced proliferative pathways may become more apparent when SMAD signaling is abrogated. Here, we determined regulation of the tumor suppressor PTEN by TGFbeta utilizing SMAD4-null colon cancer cells. TGFbeta downregulated PTEN mRNA and simultaneously induced growth proliferation. TGFbeta also induced both SMAD2 and SMAD3 nuclear translocation, but only triggered SMAD2-specific transcriptional activity in the absence of SMAD4. Interference of SMAD2 with DN-SMAD2 enhanced TGFbeta-induced cell proliferation, but downregulation of PTEN expression by TGFbeta was unaffected. TGFbeta increased PI3K tyrosine phosphorylation, and inhibition of PI3K pharmacologically or by DN-p85 transfection reversed both TGFbeta-induced PTEN suppression and TGFbeta-induced cell proliferation. Thus, TGFbeta activates PI3K to downregulate PTEN for enhancement of cell proliferation that is independent of SMAD proteins.