Insulin‐like growth factor‐I inhibits transforming growth factor‐β (TGF‐β) signaling by blocking activation of Smad3 (S3), via a phosphatidylinositol 3‐kinase (PI3K)/Akt‐dependent pathway. Here we provide the first report that the kinase activity of Akt is necessary for its ability to suppress many TGF‐β responses, including S3 activation and induction of apoptosis. Wild‐type and myristoylated Akts (Akt^WT and Akt^Myr) suppress TGF‐β‐induced phospho‐activation of S3 but not Smad2 (S2), whereas kinase‐dead Akt1 (Akt1^K179M) or dominant‐negative PI3K enhances TGF‐β‐induced phospho‐activation of both S2 and S3. Using siRNA, rapamycin (Rap), and adenoviral expression for FKBP12‐resistant and constitutively active TGF‐β type I receptor (ALK5), we demonstrate that mammalian target of Rap (mTOR) mediates Akt1 suppression of phospho‐activation of S3. These and further data on Akt1‐S3 binding do not support a recently proposed model that Akt blocks S3 activation through physical interaction and sequestration of S3 from TGF‐β receptors. We propose a novel model whereby Akt suppresses activation of S3 in an Akt kinase‐dependent manner through mTOR, a likely route for loss of tumor suppression by TGF‐β in cancers.