Nasopharyngeal carcinoma (NPC) is a common viral-associated neoplasm in which multiple signaling cascades are interfered with by Epstein-Bar virus (EBV) latent proteins and various genetic alterations. Aside from the previously reported PIK3CA amplification, we examined the role of INPP4B, a negative regulator of the PI3K/AKT signaling pathway in the development of NPC. By RT-PCR and Western blotting, we revealed that the expression of INPP4B was down-regulated in all five established EBV-positive tumor lines. While INPP4B was consistently expressed in normal nasopharyngeal epithelial cells, downregulation of INPP4B was found in 32/65 (49.2%) of primary tumors by immunohistochemistry. Furthermore, our study also demonstrated the hypermethylation of the 5'CpG island of INPP4B in the tumors in which INPP4B transcription was downregulated. Notably, the re-expression of INPP4B was detected in the NPC cells treated with the demethylation agent (5-aza-2'deoxycytidine). Our study showed that promoter hypermethylation was the major mechanism for transcriptional silencing of INPP4B in NPC. Furthermore, restoration of INPP4B expression significantly suppressed PI3K/AKT downstream signals in the NPC C666-1 cells. In vivo growth inhibition was clearly demonstrated in the tumor cells stably expressing INPP4B. The findings indicate that epigenetic inactivation of INPP4B is one of the key mechanisms in activating PI3K/AKT signaling cascade and playing a role in the tumorigenesis of NPC.