Cancer cells exhibit increased glycolysis for ATP production due, in part, to respiration injury (the Warburg effect). Because ATP generation through glycolysis is less efficient than through mitochondrial respiration, how cancer cells with this metabolic disadvantage can survive the competition with other cells and eventually develop drug resistance is a long-standing paradox. We report that mitochondrial respiration defects lead to activation of the Akt survival pathway through a novel mechanism mediated by NADH. Respiration-deficient cells (rho(-)) harboring mitochondrial DNA deletion exhibit dependency on glycolysis, increased NADH, and activation of Akt, leading to drug resistance and survival advantage in hypoxia. Similarly, chemical inhibition of mitochondrial respiration and hypoxia also activates Akt. The increase in NADH caused by respiratory deficiency inactivates PTEN through a redox modification mechanism, leading to Akt activation. These findings provide a novel mechanistic insight into the Warburg effect and explain how metabolic alteration in cancer cells may gain a survival advantage and withstand therapeutic agents.