Vulval development in Caenorhabditis elegans serves as an excellent model to examine the crosstalk between different conserved signaling pathways that are deregulated in human cancer. The concerted action of the RAS/MAPK, NOTCH, and WNT pathways determines an invariant pattern of cell fates in three vulval precursor cells. We have discovered a novel form of crosstalk between components of the Insulin and the RAS/MAPK pathways. The insulin receptor DAF-2 stimulates, while DAF-18 PTEN inhibits, RAS/MAPK signaling in the vulval precursor cells. Surprisingly, the inhibitory activity of DAF-18 PTEN on the RAS/MAPK pathway is partially independent of its PIP(3) lipid phosphatase activity and does not involve further downstream components of the insulin pathway, such as AKT and DAF-16 FOXO. Genetic and biochemical analyses indicate that DAF-18 negatively regulates vulval induction by inhibiting MAPK activation. Thus, mutations in the PTEN tumor suppressor gene may result in the simultaneous hyper-activation of two oncogenic signaling pathways.