PTEN is the lipid phosphatase that negatively regulates the PI3K signaling pathway. PI3K is induced as a result of receptor binding and activation of receptor tyrosine kinase (RTK). PI3K phosphorylates the membrane lipid PIP₂ to form PIP₃. PTEN, the lipid phosphatase removes the phosphate and reduce PIP₃ levels in the cell. By this action, PTEN blocks the receptor binding signal from propagating downstream. These downstream signals include a number of kinases that contain the pleckstrin homology (PH) domain such as PDK1 and AKT as well as others. Binding of PIP3 to the PH domain allows the exposure of residues on AKT that is critically needed for its activation. Binding of PIP3 to the PH domain also adds lipid moiety to the molecules and allows their association with membranes. The phosphorylation of AKT by PDK1 leads to its full activation. AKT, a proto-oncoprotein when activated acts as a central control for proliferation, cell survival, translation, cell size, and cell metabolism. AKT, being a serine/threonine kinase directly phosphorylates and regulates the molecules involved in these processes. Phosphorylation of GSK3α/β blocks their inhibitor activity on glycogen synthase and β-catenin. Phosphorylation of TSC2 blocks its ability to inhibit mTOR, thus allowing the downstream translational events to propagate. A prominent function of AKT on cell survival is mediate by its direct phosphorylation and negative regulation on caspases 3 and 9 as well as BAD, a proapoptosis factor. Phosphorylation of the forkhead transcription factor FOXO blocks the ligand dependent cell death as well as having an effect on cell proliferation. Phosphorylation of MDM2 by AKT leads to its cytoplasmic translocation and thus blocks its effects on p53 degradation. This is believed to be one of the mechanisms for PTEN and p53 to interact. AKT also has direct effect on cell cycle regulators like p21, p27 and cyclin D.

The PTEN regulated PI3K/AKT signaling cross talks with several other signaling pathways. These pathways include the Wnt signaling pathway, the energy signaling pathway, as well as p53 signaling. Through inhibiting GSK3β, activation of AKT leads to the stabilization of β-catenin, a critical factor in Wnt signaling. PI3K/AKT signal also cross talks with energy signaling pathway at TSC. Whereas AKT phophorylates and inhibit TSC, AMPK, a kinase activated in response to an increase in AMP:ATP ratio phosporylates and activates TSC. In addition to its function primarily through AKT in the cytoplasm, nuclear PTEN may have its unique functions. These include direct association with p53, CENP and regulation of rad 51 to control the later stages of the cell cycle and DNA repair mechanisms.