Laryngeal papillomas are caused by infection of the laryngeal epithelium by human papillomavirus type 6 or type 11 (HPV-6/-11). Previous studies in our laboratory have demonstrated an increase in PI3 kinase levels in papilloma tissue. However, activation of the downstream effector of PI3 kinase, protein kinase B (PKB/Akt), was reduced. This observation was explained by the elevated expression of the phosphatase and tensin homologue (PTEN), a recently characterized tumour suppressor, in papilloma tissue. Recent investigation of the possible functional roles of PTEN during papilloma development has now indicated that the level of tyrosine(705)-phosphorylated signal transducer and activator of transcription 3 [PTyr(705)STAT3] could be inversely correlated to that of PTEN as well. In vitro phosphatase assays suggested the presence of an increased level of a PTyr(705)STAT3 phosphatase in papilloma extract. Immunodepletion of PTEN from papilloma extracts resulted in a reduction of the PTyr(705)STAT3 phosphatase activity. Transfection of PTEN cDNA into HeLa cells attenuated STAT3 phosphorylation at Tyr(705) in a dose-dependent manner. This attenuation of STAT3 phosphorylation was independent of the STAT3 kinase. Interestingly, introduction of a lipid phosphatase mutant of PTEN (G129E) resulted in heightened PTyr(705)STAT3 phosphatase activity, relative to that obtained from wild-type PTEN transfection. These data indicate that PTEN negatively regulates STAT3 activation in HPV-infected papilloma cells. Induction of PTEN and reduction of activated STAT3 might be a result of a host defence mechanism or a virus-directed strategy to alter normal epithelial differentiation programming.