Diabetic nephropathy (DN) is characterized by mesangial cell (MC) expansion and accumulation of extracellular matrix proteins. TGF-beta is increased in MC under diabetic conditions and in DN and activates key signaling pathways, including the phosphoinositide-3-kinase/Akt (PI3K/Akt) pathway. FoxO transcription factors play roles in cell survival and oxidative stress and are negatively regulated by Akt-mediated phosphorylation. We tested whether phosphorylation-mediated inactivation of FoxO3a by TGF-beta can mediate MC survival and oxidative stress. TGF-beta treatment significantly increased levels of p-Akt (activation) and p-FoxO3a (inactivation) in cultured MC. This FoxO3a inactivation was accompanied by significant decreases in the expression of two key FoxO3a target genes, the proapoptotic Bim and antioxidant manganese superoxide dismutase in MC. TGF-beta treatment triggered the nuclear exclusion of FoxO3a, significantly inhibited FoxO3a transcriptional activity, and markedly protected MC from apoptosis. A PI3K inhibitor blocked these TGF-beta effects. It is interesting that p-Akt and p-FoxO3A levels also were increased in renal cortical tissues from rats and mice at 2 wk after the induction of diabetes by streptozotocin, thus demonstrating in vivo significance. In summary, TGF-beta and diabetes can increase FoxO3a phosphorylation and transcriptional inactivation via PI3K/Akt. These new results suggest that Akt/FoxO pathway regulation may be a novel mechanism by which TGF-beta can induce unopposed MC survival and oxidant stress in early DN, thereby accelerating renal disease.