AKT signaling is constitutively activated in various cancers, due in large part to loss-of-function in the PTEN and PHLPP phosphatases that act as tumor suppressor genes. However, AKT signaling is activated widely in non-small cell lung cancers (NSCLC) where genetic alterations in PTEN or PHLPP genes are rare, suggesting an undefined mechanism(s) for their suppression. In this study, we report upregulation of the oncomir microRNA (miR)-205 in multiple subtypes of NSCLC, which directly represses PTEN and PHLPP2 expression and activates both the AKT/FOXO3a and AKT/mTOR signaling pathways. miR-205 overexpression in NSCLC cells accelerated tumor cell proliferation and promoted blood vessel formation in vitro and in vivo. Conversely, RNA interference-mediated silencing of endogenous miR-205 abrogated these effects. The malignant properties induced by miR-205 in NSCLC cells were reversed by AKT inhibitors, FOXO3a overexpression, rapamycin treatment, or restoring PHLPP2 or PTEN expression. Mechanistic investigations revealed that miR-205 overexpression was a result of NF-kB-mediated transactivation of the miR-205 gene. Taken together, our results define a major epigenetic mechanism for suppression of PTEN and PHLPP2 in NSCLC, identifying a pivotal role for miR-205 in development and progression of this widespread disease. Cancer Res; 73(17); 5402-15. Ó2013 AACR.