The proto-oncogene AKT (also known as PKB) is activated in many human cancers, mostly owing to loss of the PTEN tumour suppressor. In such tumours, AKT becomes enriched at cell membranes where it is activated by phosphorylation. Yet many targets inhibited by phosphorylated AKT (for example, the FOXO transcription factors) are nuclear; it has remained unclear how relevant nuclear phosphorylated AKT (pAKT) function is for tumorigenesis. Here we show that the PMLtumour suppressor prevents cancer by inactivating pAKT inside the nucleus. We find in a mouse model that Pml loss markedly accelerates tumour onset, incidence and progression in Pten-heterozygous mutants, and leads to female sterility with features that recapitulate the phenotype of Foxo3a knockout mice. We show that Pml deficiency on its own leads to tumorigenesis in the prostate, a tissue that is exquisitely sensitive to pAkt levels, and demonstrate that Pml specifically recruits the Akt phosphatase PP2a as well as pAkt into Pml nuclear bodies. Notably, we find that Pml-null cells are impaired in PP2a phosphatase activity towards Akt, and thus accumulate nuclear pAkt. As a consequence, the progressive reduction in Pml dose leads to inactivation of Foxo3a-mediated transcription of proapoptotic Bim and the cell cycle inhibitor p27^kip1. Our results demonstrate that Pml orchestrates a nuclear tumour suppressor network for inactivation of nuclear pAkt, and thus highlight the importance of AKT compartmentalization in human cancer pathogenesis and treatment.