Transforming growth factor beta (TGFbeta) has profound growth-suppressive effects on normal epithelial cells, but supports metastasis formation in many tumour types. In most epithelial tumour cells TGFbeta(1) treatment results in epithelial dedifferentiation with reduced cell aggregation and enhanced cellular migration. Here we show that the epithelial dedifferentiation, accompanied by dissociation of the E-cadherin adhesion complex, induced by TGFbeta(1) depended on phosphatidylinositol 3-kinase (PI3-kinase) and the phosphatase PTEN as analysed in PANC-1 and Smad4-deficient BxPC-3 pancreatic carcinoma cells. TGFbeta(1) treatment enhanced tyrosine phosphorylation of alpha- and beta-catenin, which resulted in dissociation of the E-cadherin/catenin complex from the actin cytoskeleton and reduced cell-cell adhesion. The PI3-kinase and PTEN were found associated with the E-cadherin/catenin complex via beta-catenin. TGFbeta(1) treatment reduced the amount of PTEN bound to beta-catenin and markedly increased the tyrosine phosphorylation of beta-catenin. By contrast, forced expression of PTEN clearly reduced the TGFbeta(1)-induced phosphorylation of beta-catenin. The TGFbeta(1)-induced beta-catenin phosphorylation was also dependent on PI3-kinase and Ras activity. The described effects of TGFbeta(1) were independent of Smad4, which is homozygous deleted in BxPC-3 cells. Collectively, these data show that the TGFbeta(1)-induced destabilisation of E-cadherin-mediated cell-cell adhesion involves phosphorylation of beta-catenin, which is regulated by E-cadherin adhesion complex-associated PI3-kinase and PTEN.