Downregulation of the cellular retinol-binding protein-I (CRBP-I) occurs in breast and other human cancers, but its significance is not well understood. Recently, we showed that restoration of CRBP-I expression in transformed MTSV1-7 breast epithelial cells increased retinoic receptor activity, inhibited anoikis, promoted acinar differentiation and inhibited tumorigenicity, suggesting that CRBP-I suppresses tumor progression. However, the mechanism underlying these effects of CRBP-I was not elucidated. Here we demonstrate, using genetic and pharmacological approaches, that CRBP-I inhibits, in a retinoic acid receptor-dependent manner, the PI3K/Akt survival pathway. Inhibition of PI3K/Akt was necessary and sufficient to explain the antitumor effects of CRBP-I and was mediated by decreased p85 regulatory and p110 catalytic subunit heterodimerization. We present evidence consistent with the idea that this effect is due to CRBP-I inhibition of p85 phosphorylation at Y688. To our knowledge, this is the first demonstration of PI3K regulation at the level of p85-p110 heterodimerization. These findings lead us to hypothesize that CRBP-I downregulation in cancer promotes tumor progression through inhibition of retinoic acid receptor activity and derepression of PI3K/Akt signaling via a novel mechanism.