PIK3CA is mutated in diverse human cancers, but the functional effects of these mutations have not been defined. To evaluate the consequences of PIK3CA alterations, the two most common mutations were inactivated by gene targeting in colorectal cancer (CRC) cells. Biochemical analyses of these cells showed that mutant PIK3CA selectively regulated the phosphorylation of AKT and the forkhead transcription factors FKHR and FKHRL1. PIK3CA mutations had little effect on growth under standard conditions, but reduced cellular dependence on growth factors. PIK3CA mutations resulted in attenuation of apoptosis and facilitated tumor invasion. Treatment with the PI3K inhibitor LY294002 abrogated PIK3CA signaling and preferentially inhibited growth of PIK3CA mutant cells. These data have important implications for therapy of cancers harboring PIK3CA alterations.