The phosphatase and tensin homolog (PTEN) is a tumor suppressor that is inactivated in many human cancers. PTEN loss has been associated with resistance to inhibitors of the epidermal growth factor receptor (EGFR), but the molecular basis of this resistance is unclear. It is believed that unopposed phosphatidylinositol-3-kinase (PI3K) activation through multiple receptor tyrosine kinases (RTKs) can relieve PTEN-deficient cancers from their "dependence" on EGFR or any other single RTK for survival. Here we report a distinct resistance mechanism whereby PTEN inactivation specifically raises EGFR activity by impairing the ligand-induced ubiquitylation and degradation of the activated receptor through destabilization of newly formed ubiquitin ligase Cbl complexes. PTEN-associated resistance to EGFR kinase inhibitors is phenocopied by expression of dominant negative Cbl and can be overcome by more complete EGFR kinase inhibition. PTEN inactivation does not confer resistance to inhibitors of the MET or PDGFRA kinase. Our study identifies a critical role for PTEN in EGFR signal termination and suggests that more potent EGFR inhibition should overcome resistance caused by PI3K pathway activation.