It is widely accepted that reactive oxygen species (ROS) promote tumorigenesis. However, the exact mechanisms are still unclear. As mice lacking the peroxidase peroxiredoxin1 (Prdx1) produce more cellular ROS and die prematurely of cancer, they offer an ideal model system to study ROS-induced tumorigenesis. Prdx1 ablation increased the susceptibility to Ras-induced breast cancer. We, therefore, investigated the role of Prdx1 in regulating oncogenic Ras effector pathways. We found Akt hyperactive in fibroblasts and mammary epithelial cells lacking Prdx1. Investigating the nature of such elevated Akt activation established a novel role for Prdx1 as a safeguard for the lipid phosphatase activity of PTEN, which is essential for its tumour suppressive function. We found binding of the peroxidase Prdx1 to PTEN essential for protecting PTEN from oxidation-induced inactivation. Along those lines, Prdx1 tumour suppression of Ras- or ErbB-2-induced transformation was mediated mainly via PTEN.