Tuberous sclerosis (TSC) is an autosomal dominant disorder characterized by the formation of hamartomas in a wide range of human tissues. Mutation in either the TSC1 or TSC2 tumour suppressor gene is responsible for both the familial and sporadic forms of this disease. TSC1 and TSC2 proteins form a physical and functional complex in vivo. Here, we show that TSC1–TSC2 inhibits the p70 ribosomal protein S6 kinase 1 (an activator of translation) and activates the eukaryotic initiation factor 4E binding protein 1 (4E-BP1, an inhibitor of translational initiation). These functions of TSC1–TSC2 are mediated by inhibition of the mammalian target of rapamycin (mTOR). Furthermore, TSC2 is directly phosphorylated by Akt, which is involved in stimulating cell growth and is activated by growth stimulating signals, such as insulin. TSC2 is inactivated by Akt-dependent phosphorylation, which destabilizes TSC2 and disrupts its interaction with TSC1. Our data indicate a molecular mechanism for TSC2 in insulin signalling, tumour suppressor functions and in the inhibition of cell growth.