PTEN is a tumor suppressor that antagonizes phosphatidylinositol-3 kinase (PI3K) by dephosphorylating the D3 position of phosphatidylinositol (3,4,5)-triphosphate (PtdIns-3,4,5-P3). Given the importance of PTEN in regulating PtdIns-3,4,5-P3 levels, we used Affymetrix GeneChip arrays to identify genes regulated by PTEN. PTEN expression rapidly reduced the activity of Akt, which was followed by a G(1) arrest and eventually apoptosis. The gene encoding insulin receptor substrate 2 (IRS-2), a mediator of insulin signaling, was found to be the most induced gene at all time points. A PI3K-specific inhibitor, LY294002, also upregulated IRS-2, providing evidence that it was the suppression of the PI3K pathway that was responsible for the message upregulation. In addition, PTEN, LY294002, and rapamycin, an inhibitor of mammalian target of rapamycin, caused a reduction in the molecular weight of IRS-2 and an increase in the association of IRS-2 with PI3K. Apparently, PTEN inhibits a negative regulator of IRS-2 to upregulate the IRS-2-PI3K interaction. These studies suggest that PtdIns-3,4,5-P3 levels regulate the specific activity and amount of IRS-2 available for insulin signaling.