PTEN is a tumor suppressor frequently inactivated in brain, prostate, and uterine cancers that acts as a phosphatase on phosphatidylinositol-3, 4, 5-trisphosphate, antagonizing the activity of the phosphatidylinositol 3′-OH kinase. PTEN manifests its tumor suppressor function in most tumor cells by inducing G 1-phase cell cycle arrest. To study the mechanism of cell cycle arrest, we established a tetracycline-inducible expression system for PTEN in cell lines lacking this gene. Expression of wild-type PTEN but not of mutant forms unable to dephosphorylate phosphoinositides reduced the expression of cyclin D1. Cyclin D1 reduction was accompanied by a marked decrease in endogenous retinoblastoma (Rb) protein phosphorylation on cyclin D/CDK4-specific sites, showing an early negative effect of PTEN on Rb inactivation. PTEN expression also prevented cyclin D1 from localizing to the nucleus during the G 1-to S-phase cell cycle transition. The PTEN-induced localization defect and the cell growth arrest could be rescued by the expression of a nucleus-persistent mutant form of cyclin D1, indicating that an important effect of PTEN is at the level of nuclear availability of cyclin D1. Constitutively active Akt/PKB kinase counteracted the effect of PTEN on cyclin D1 translocation. The data are consistent with an oncogenesis model in which a lack of PTEN fuels the cell cycle by increasing the nuclear availability of cyclin D1 through the Akt/PKB pathway.