Phosphatidylinositol 3-kinase (PI3K) regulates many cellular functions including growth and survival, and its excessive activation is a hallmark of cancer. Somatostatin, acting through its G protein-coupled receptor (GPCR) sst2, has potent proapoptotic and anti-invasive activities on normal and cancer cells. Here, we report a novel mechanism for inhibiting PI3K activity. Somatostatin, acting through sst2, inhibits PI3K activity by disrupting a pre-existing complex comprising the sst2 receptor and the p85 PI3K regulatory subunit. Surface plasmon resonance and molecular modeling identified the phosphorylated-Y71 residue of a p85-binding pYXXM motif in the first sst2 intracellular loop, and p85 COOH-terminal SH2 as direct interacting domains. Somatostatin-mediated dissociation of this complex as well as p85 tyrosine dephosphorylation correlates with sst2 tyrosine dephosphorylation on the Y71 residue. Mutating sst2-Y71 disabled sst2 to interact with p85 and somatostatin to inhibit PI3K, consequently abrogating sst2's ability to suppress cell survival and tumor growth. These results provide the first demonstration of a physical interaction between a GPCR and p85, revealing a novel mechanism for negative regulation by ligand-activated GPCR of PI3K-dependent survival pathways, which may be an important molecular target for antineoplastic therapy.