PTEN is frequently mutated in prostate cancer. The tumor suppressor function of PTEN is attributed to its lipid phosphatase activity that counters PI3K action. Here, we report a PTEN-ARID4B-PI3K axis in which PTEN inhibits expression of ARID4B, while ARID4B is a transcriptional activator of the PI3K subunit genes PIK3CA and PIK3R2 that are crucial for activation of the PI3K/AKT pathway. Reciprocal binding of ARID4B and histone H1 to the PIK3CA and PIK3R2 promoters modulates chromatin condensation, suggesting a mechanism by which ARID4B activates these promoters. Functional analyses reveals that ARID4B is required for prostate tumorigenesis when PTEN is deficient. The biological significance is further substantiated by the existence of a PTEN/ARID4B/PIK3CA three-gene signature that improves the predictive power for prostate cancer recurrence in patients. In summary, we identify ARID4B as a master regulator in the PTEN-PI3K pathway, thus providing a potential therapeutic target for prostate cancer carrying PTEN mutations.