Phosphatase and tensin homologue deleted on chromosome 10 (PTEN) is a lipid phosphatase. PTEN inhibits the action of phosphatidylinositol-3-kinase and reduces the levels of phosphatidylinositol triphosphate, a crucial second messenger for cell proliferation and survival, as well as insulin signaling. In this study, we deleted Pten specifically in the insulin producing beta cells during murine pancreatic development. Pten deletion leads to increased cell proliferation and decreased cell death, without significant alteration of beta-cell differentiation. Consequently, the mutant pancreas generates more and larger islets, with a significant increase in total beta-cell mass. PTEN loss also protects animals from developing streptozotocin-induced diabetes. Our data demonstrate that PTEN loss in beta cells is not tumorigenic but beneficial. This suggests that modulating the PTEN-controlled signaling pathway is a potential approach for beta-cell protection and regeneration therapies.