The tumor suppressor PTEN possesses lipid and protein phosphatase activities. It has been well established that the lipid phosphatase activity is essential for its tumor-suppressive function via the phosphoinositide 3-kinase (PI3K) and Akt pathways. The precise role of the protein phosphatase activity is still unclear. In the current study, we demonstrate that overexpression of wild-type PTEN in the MCF-7 breast cancer line results in phosphatase activity-dependent decreases in the phosphorylation of ETS-2, which is a transcription factor whose DNA-binding ability is controlled by phosphorylation. Exposure of MCF-7 cells to insulin, insulin-like growth factor 1 (IGF-1) or epidermal growth factor (EGF) can lead to the phosphorylation of ETS-2, Akt and ERK1/2. The MEK inhibitor PD590089 abrogates insulin-stimulated phosphorylation of ETS-2. In contrast, the PI3K inhibitor LY492002 has no effect on insulin-stimulated phosphorylation of ETS-2, despite the fact that it diminishes insulin-stimulated phosphorylation of Akt. Interestingly, overexpression of PTEN in MCF-7 leads to blockade of insulin-stimulated, but not EGF-stimulated, phosphorylation of ERK, accompanied by dramatic decreases in ETS-2 phosphorylation. We further show that the relationship of PTEN and ETS-2 has functional significance by demonstrating that PTEN abrogates activation of the uPA Ras-responsive enhancer, a target of ETS-2 action, in a phosphatase-dependent manner, irrespective of the presence or absence of insulin. Our observations, therefore, suggest that PTEN blocks insulin-stimulated ETS-2 phosphorylation through inhibition of the ERK members of the MAP kinase family independently of PI3K, and that the PTEN effect on the phosphorylation status of ETS-2 may be mediated through PTEN's protein phosphatase activity.