Prostaglandin E(2) (PGE(2)) is an arachidonic acid metabolite that counters transforming growth factor-beta-induced fibroblast activation via E prostanoid 2 (EP2) receptor binding. Phosphatase and tensin homologue on chromosome 10 (PTEN) is a lipid phosphatase that, by antagonizing the phosphoinositol 3-kinase (PI3K) pathway, also inhibits fibroblast activation. Here, we show that PTEN directly regulates PGE(2) inhibition of fibroblast activation by augmenting EP2 receptor expression. The increase in collagen production and alpha-smooth muscle actin expression observed in fibroblasts in which PTEN is deficient was resistant to the usual suppressive effects of PGE(2). This was due to marked down-regulation of EP2, a G(s) protein-coupled receptor (GPCR) that mediates the inhibitory actions of this prostanoid via cAMP. pten(-/-) or PTEN-inhibited fibroblasts in which the PI3K pathway was blocked demonstrated a restoration of EP2 receptor expression, due to augmented gene transcription and mRNA instability. Importantly, restoration of the balance between PI3K and PTEN reestablished the inhibitory effect of PGE(2) on fibroblast activation. No such influence of PTEN was observed on alternative E prostanoid GPCRs. Moreover, our studies identified a positive feedback loop in which cAMP signaling enhanced EP2 receptor expression, independent of PTEN. Therefore, our findings indicate that PTEN regulates the antifibrotic effects of PGE(2) by a specific and permissive effect on EP2 receptor expression. Further, our data imply that cAMP signaling circumvents EP2 down-regulation in pten-deficient cells to restore EP2 receptor expression. This is the first description, to our knowledge, of PI3K/PTEN balance directing GPCR expression, and provides a novel mechanism for cellular effects of PTEN.