Molecular mechanisms that modulate liver regeneration are of critical importance for a number of hepatic disorders. Kupffer cells and natural killer (NK) cells are two cell subsets indispensable for liver regeneration. We have focused on these two populations and, in particular, the interplay between them. Importantly, we demonstrate that deletion of the myeloid phosphatase and tensin homolog on chromosome 10 (PTEN) leading to an M2-like polarization of Kupffer cells, which results in decreased activation of NK cells. In addition, PTEN-deficient Kupffer cells secrete additional factors that facilitate the proliferation of hepatocytes. In conclusion, PTEN is critical for inhibiting M2-like polarization of Kupffer cells after partial hepatectomy, resulting in NK cell activation and thus the inhibition of liver regeneration. Furthermore, PTEN reduces growth factor secretion by Kupffer cells. Our results suggest that targeting PTEN on Kupffer cells may be useful in altering liver regeneration in patients undergoing liver resection.