The atypical PKC‐interacting protein, Par‐4, inhibits cell survival and tumorigenesis in vitro, and its genetic inactivation in mice leads to reduced lifespan, enhanced benign tumour development and low‐frequency carcinogenesis. Here, we demonstrate that Par‐4 is highly expressed in normal lung but reduced in human lung cancer samples. We show, in a mouse model of lung tumours, that the lack of Par‐4 dramatically enhances Ras‐induced lung carcinoma formation in vivo, acting as a negative regulator of Akt activation. We also demonstrate in cell culture, in vivo, and in biochemical experiments that Akt regulation by Par‐4 is mediated by PKCζ, establishing a new paradigm for Akt regulation and, likely, for Ras‐induced lung carcinogenesis, wherein Par‐4 is a novel tumour suppressor.