Most prostate cancers are insensitive to growth-inhibitory effect of TGF-β, while PI3K-PKB signaling is highly activated in prostate cancers. We investigated whether the PI3K-PKB signaling contributes to TGF-β insensitivity in PTEN-null prostate cancer PC-3 cells. Cell growth analysis showed that inhibition of PI3K-PKB pathway by LY294002 enhanced growth inhibition and cell cycle arrest induced by TGF-β. Furthermore, activation of PI3K-PKB pathway by insulin or overexpression of PKB decreased the transcriptional activity of TGF-β, as measured by the TGF-β/Smad3-responsive CAGAluciferase reporter, while inhibition of PI3K-PKB pathway by introducing PTEN, inactive PKB mutant or using LY294002 promoted TGF-β-induced expression of CAGA-luciferase. Co-immunoprecipitation studies further demonstrated that Smad3 interacted with PKB through its linker region and MH2 domain.This interaction was facilitated by insulin and disrupted by TGF-β signaling activation. Our results suggest that the PI3K-PKB pathway may play an important role in rendering cell resistance to the antiproliferative effect of TGF-β and regulating cell response to TGF-β.