Abstract Background Phosphatase and tensin homologue deleted on chromosome 10 (PTEN) is a phosphatase having both protein and lipid phosphatase activities, and is known to antagonize the phosphoinositide 3-kinase/AKT (PI3K/AKT) signaling pathway, resulting in tumor suppression. PTEN is also known to play a role in the regulation of numerous transcription factors. Amplified in breast cancer 1 (AIB1) is a transcriptional coactivator that mediates the transcriptional activities of nuclear receptors and other transcription factors. The present study investigated how PTEN may regulate AIB1, which is amplified and/or overexpressed in many human carcinomas, including breast cancers. Results PTEN interacted with AIB1 via its phophatase domain and regulated the transcriptional activity of AIB1 by enhancing the ubiquitin-mediated degradation of AIB1. This process did not appear to require the phosphatase activity of PTEN, but instead, involved the interaction between PTEN and F-box and WD repeat domain-containing 7 alpha (Fbw7α), the E3 ubiquitin ligase involved in the ubiquitination of AIB1. PTEN interacted with Fbw7α via its C2 domain, thereby acting as a bridge between AIB1 and Fbw7α, and this led to enhanced degradation of AIB1, which eventually accounted for its decreased transcriptional activity. At the cell level, knockdown of PTEN in MCF-7 cells promoted cell proliferation. However when AIB1 was also knocked down, knockdown of PTEN had no effect on cell proliferation. Conclusions PTEN might act as a negative regulator of AIB1 whereby the association of PTEN with both AIB1 and Fbw7α could lead to the downregulation of AIB1 transcriptional activity, with the consequence of regulating the oncogenic function of AIB1.