In normal epithelial tissues, the multifunctional cytokine transforming growth factor-β (TGF-β) acts as a tumor suppressor through growth inhibition and induction of differentiation whereas in advanced cancers, TGF-β promotes tumor progression through induction of tumor invasion, neoangiogenesis, and immunosuppression. The molecular mechanisms through which TGF-β shifts from a tumor suppressor to a tumor enhancer are poorly understood. We now show a role for the tumor suppressor phosphatase and tensin homologue deleted on chromosome 10 (PTEN) in repressing the protumorigenic effects of TGF-β. The TGF-β effector SMAD3 inducibly interacts with PTEN on TGF-β treatment under endogenous conditions. RNA interference (RNAi) suppression of PTEN expression enhances SMAD3 transcriptional activity and TGF-β-mediated induction of SMAD3 target genes whereas reconstitution of PTEN in a null cancer cell line represses the expression of TGF-β-regulated target genes. Targeting PTEN expression through RNAi in a PTEN wild-type cell line increases TGF-β-mediated invasion but does not affect TGF-β-mediated growth inhibition. Reconstitution of PTEN expression in a PTEN-null cell line blocks TGF-β-induced invasion but does not modulate TGF-β-mediated growth regulation. These effects are distinct from Akt and Forkhead family members that also interact with SMAD3 to regulate apoptosis or proliferation, respectively. Pharmacologic inhibitors targeting TGF-β receptors and phosphatidylinositol 3-kinase signaling downstream from PTEN cooperate to block TGF-β-mediated invasion. Thus, the loss of PTEN expression in human cancers may contribute to a role for TGF-β as a tumor enhancer with specific effects on cellular motility and invasion. ©2005 American Association for Cancer Research.