Liver tumor cells arise from normal hepatocytes that escape negative control of proliferation. The transcription factor C/EBPalpha maintains quiescence of hepatocytes through two pathways: inhibition of cdks and repression of E2F. Nevertheless, liver tumors and cultured hepatoma cell lines proliferate in the presence of C/EBPalpha. In this paper, we present evidence that the activation of the PI3K/Akt pathway in liver tumor cells blocks the growth inhibitory activity of C/EBPalpha through the PP2A-mediated dephosphorylation of C/EBPalpha on Ser 193, leading to a failure of C/EBPalpha to interact with and inhibit cdks and E2F. Mutation of Ser 193 to Ala also abolishes the ability of C/EBPalpha to cause growth arrest because of a lack of interactions with cdk2 and E2F-Rb complexes. These data provide a molecular basis for the development of liver tumors in which the activation of PI3K/Akt pathway neutralizes C/EBPalpha growth inhibitory activity.