Akt is a crucial phosphoinositide 3-kinase (PI(3)K) effector that regulates cell proliferation and survival. PI(3)K-generated signals, PtdIns(3,4,5)P(3) and PtdIns(3,4)P(2), direct Akt plasma membrane engagement. Pathological Akt plasma membrane association promotes oncogenesis. PtdIns(3,4)P(2) is degraded by inositol polyphosphate 4-phosphatase-1 (4-ptase-1) forming PtdIns(3)P; however, the role of 4-ptase-1 in regulating the activation and function of Akt is unclear. In mouse embryonic fibroblasts lacking 4-ptase-1 ((-/-)MEFs), the Akt-pleckstrin homology (PH) domain was constitutively membrane-associated both in serum-starved and agonist-stimulated cells, in contrast to (+/+)MEFs, in which it was detected only at the plasma membrane following serum stimulation. Epidermal growth factor (EGF) stimulation resulted in increased Ser(473) and Thr(308)-Akt phosphorylation and activation of Akt-dependent signalling in (-/-)MEFs, relative to (+/+)MEFs. Significantly, loss of 4-ptase-1 resulted in increased cell proliferation and decreased apoptosis. SV40-transformed (-/-)MEFs showed increased anchorage-independent cell growth and formed tumours in nude mice. This study provides the first evidence, to our knowledge, that 4-ptase-1 controls the activation of Akt and thereby cell proliferation, survival and tumorigenesis.