Inactivation of the tumor suppressor PTEN gene is found in a variety of human cancers and in cancer predisposition syndromes. Recently, PTEN protein has been shown to possess phosphatase activity on phosphatidylinositol 3,4,5-trisphosphate, a product of phosphatidylinositol 3-kinase. We have identified a homolog of PTEN in Caenorhabditis elegans and have found that it corresponds to the daf-18 gene, which had been defined by a single, phenotypically weak allele, daf-18(e1375). By analyzing an allele, daf-18(nr2037), which bears a deletion of the catalytic portion of CePTEN/DAF-18, we have shown that mutation in daf-18 can completely suppress the dauer-constitutive phenotype caused by inactivation of daf-2 or age-1, which encode an insulin receptor-like molecule and the catalytic subunit of phosphatidylinositol 3-kinase, respectively. In addition, daf-18(nr2037) dramatically shortens lifespan, both in a wild-type background and in a daf-2 mutant background that normally prolongs lifespan. The lifespan in a daf-18(nr2037) mutant can be restored to essentially that of wild type when combined with a daf-2 mutation. Our studies provide genetic evidence that, in C. elegans, the PTEN homolog DAF-18 functions as a negative regulator of the DAF-2 and AGE-1 signaling pathway, consistent with the notion that DAF-18 acts a phosphatidylinositol 3,4,5-trisphosphate phosphatase in vivo. Furthermore, our studies have uncovered a longevity-promoting activity of the PTEN homolog in C. elegans.