The ErbB2-targeting antibody, trastuzumab (Herceptin), has remarkable therapeutic efficacy in certain patients with ErbB2-overexpressing tumors. The overall trastuzumab response rate, however, is limited and what determines trastuzumab response is poorly understood. Here we report that PTEN activation contributes to trastuzumab's antitumor activity. Trastuzumab treatment quickly increased PTEN membrane localization and phosphatase activity by reducing PTEN tyrosine phosphorylation via Src inhibition. Reducing PTEN in breast cancer cells by antisense oligonucleotides conferred trastuzumab resistance in vitro and in vivo. Patients with PTEN-deficient breast cancers had significantly poorer responses to trastuzumab-based therapy than those with normal PTEN. Thus, PTEN deficiency is a powerful predictor for trastuzumab resistance. Additionally, PI3K inhibitors rescued PTEN loss-induced trastuzumab resistance, suggesting that PI3K-targeting therapies could overcome this resistance.