PTEN is a lipid phosphatase responsible for down-regulating the phosphoinositide 3-kinase product phosphatidylinositol 3,4,5-triphosphate. Phosphatidylinositol 3,4,5-triphosphate is involved in the activation of the anti-apoptotic effector target, Akt. Although the Akt pathway has been implicated in regulating NF-kappaB activity, it is controversial as to whether Akt activates NF-kappaB predominantly through mechanisms that regulate nuclear translocation or transactivation potential. In this report, we utilized PTEN as a natural biological inhibitor of Akt activity to study the effects on tumor necrosis factor (TNF)-induced activation of NF-kappaB. We found that the reintroduction of PTEN into prostate cells inhibited TNF-stimulated NF-kappaB transcriptional activity. PTEN failed to block TNF-induced IKK activation, IkappaBalpha degradation, p105 processing, p65 (RelA) nuclear translocation, and DNA binding of NF-kappaB. However, PTEN inhibited NF-kappaB-dependent transcription by blocking the ability of TNF to stimulate the transactivation domain of the p65 subunit. PTEN also inhibited the transactivation potential of the cyclic AMP-response element-binding protein, but this was not observed for c-Jun. The transactivation potential of p65 following TNF stimulation could be rescued from PTEN-dependent repression by re-introducing expression constructs encoding activated forms of phosphoinositide 3-kinase, Akt, or Akt and IKK. The ability of PTEN to inhibit the TNF-induced transactivation function of p65 is important, because expression of PTEN blocked TNF-stimulated NF-kappaB-dependent gene expression, thus sensitizing cells to TNF-induced apoptosis. Maintenance of the PTEN tumor suppressor protein is therefore required to modulate Akt activity and to concomitantly control the transcriptional activity of the anti-apoptotic transcription factor NF-kappaB.