Chronic ethanol consumption may produce hepatic injury and impair the ability of the liver to regenerate principally through its action on insulin signaling. These effects are mediated by insulin receptor substrate-1 (IRS-1) via the mitogen-activated protein kinase/extracellular signal regulated kinase (MAPK/Erk) pathway and by survival signals through phosphatidylinositol-3 kinase (PI3K) and protein kinase B (Akt). Because a protein phosphatase, phosphatase tensin homolog deleted on chromosome 10 (PTEN), has been reported to block insulin signaling through PI3K, we explored acute ethanol effects on signaling in the context of PTEN function. We measured upstream components of the insulin signal transduction pathway and Akt phosphorylation as an indicator of signaling through PI3K, including the generation of survival signals via glycogen synthase kinase 3β (GSK3β) and Bcl-2–associated death promoter (BAD). In addition, the physical association between PTEN and PI3K regulatory (p85α) and catalytic (p110α) subunits was evaluated both in vitro and in vivo. In Huh-7 cells, there was no effect of acute ethanol exposure on tyrosyl phosphorylation of the insulin receptor, IRS-1, and the association of IRS-1 with PI3K. However, Akt phosphorylation was impaired. The association of PTEN with the PI3K p85α subunit was substantially increased and led to the inhibition of downstream insulin-mediated survival signals through Akt, GSK3β, and BAD; the ethanol effect was reversed by PTEN knockdown with small interfering RNA. These results were confirmed in the liver. Conclusion: Short-term ethanol exposure rapidly attenuates insulin signaling. The major cellular mechanism involves the increased association of PTEN with the PI3K p85α subunit, which results in reduced phospho-Akt formation and impaired downstream survival signaling. These findings may have relevance to acute toxic effects of ethanol on the liver. (HEPATOLOGY 2007.)