Insulin signaling in the liver leads to accumulation of phosphatidylinositol (3,4,5)-trisphosphate (PIP3). Deletion of the phosphatase Pten (phosphatase and tensin homologue deleted on chromosome 10) reduces PIP3 levels and leads to fatty liver development. The purpose of this study was to investigate the mechanisms underlying lipogenesis that result from PIP3 accumulation using liver Pten-deletion mice. To explore the role of AKT2, the major liver AKT isoform in steatosis induced by deletion of Pten, we created mice lacking both Pten and Akt2 in hepatocytes and compared the effect of deleting Akt2 and Pten in the double mutants to the Pten deletion mice alone. Hepatic lipid accumulation was significantly reduced in mice lacking both PTEN and AKT2, as compared with Pten mutant mice alone. This effect was due to the role of AKT2 in maintaining expression of genes involved in de novo lipogenesis. We showed that lipid accumulation in the double mutant hepatocytes was partially reversed by expression of constitutive active FOXO1, a transcription factor downstream of AKT not dependent on inhibition of atypical protein kinase C. In summary, this study delineated regulation of lipid metabolism by PI3K signaling pathway by showing that AKT mediates PIP3 accumulation (mimicked by PTEN loss) induced lipid deposition in the liver and provided an important molecular mechanism for insulin-regulated hepatic lipogenesis.