Ectopic expression of mutant forms of phosphatase and tensin homologue deleted on chromosome 10 (PTEN) lacking lipid (G129E) or lipid and protein (C124S) phosphatase activity decreased sensitivity of MCF-7 breast cancer cells, which have wild-type PTEN, to doxorubicin and increased sensitivity to the mammalian target of rapamycin (mTOR) inhibitor rapamycin. Cells transfected with a mutant PTEN gene lacking both lipid and protein phosphatase activities were more resistant to doxorubicin than cells transfected with the PTEN mutant lacking lipid phosphatase activity indicating that the protein phosphatase activity of PTEN was also important in controlling the sensitivity to doxorubicin, while no difference was observed between the lipid (G129E) and lipid and protein (C124S) phosphatase PTEN mutants in terms of sensitivity to rapamycin. A synergistic inhibitory interaction was observed when doxorubicin was combined with rapamycin in the phosphatase-deficient PTEN-transfected cells. Interference with the lipid phosphatase activity of PTEN was sufficient to activate Akt/mTOR/p70S6K signaling. These studies indicate that disruption of the normal activity of the PTEN phosphatase can have dramatic effects on the therapeutic sensitivity of breast cancer cells. Mutations in the key residues which control PTEN lipid and protein phosphatase may act as dominant-negative mutants to suppress endogenous PTEN and alter the sensitivity of breast cancer patients to chemo- and targeted therapies.