Recent studies have demonstrated that the tumor suppressor PTEN (phosphatase and tensin homolog deleted from chromosome 10), the antagonist of the phosphosphoinositol-3-kinase (PI3K) signaling cascade, is susceptible to H2O2-dependent oxidative inactivation. This study describes the use of redox-engineered cell lines to identify PTEN as sensitive to oxidative inactivation by mitochondrial H2O2. Increases in the steady state production of mitochondrial derived H2O2, as a result of manganese superoxide dismutase (Sod2) overexpression, led to PTEN oxidation that was reversed by the coexpression of the H2O2-detoxifying enzyme catalase. The accumulation of an oxidized inactive fraction of PTEN favored the formation of phosphatidylinositol 3,4,5-triphosphate at the plasma membrane, resulting in increased activation of Akt and modulation of its downstream targets. PTEN oxidation in response to mitochondrial H2O2 enhanced PI3K signaling, leading to increased expression of the key regulator of angiogenesis, vascular endothelial growth factor. Overexpression of PTEN prevented the H2O2-dependent increase in vascular endothelial growth factor promoter activity and immunoreactive protein, whereas a mutant PTEN (G129R), lacking phosphatase activity, did not. Furthermore, mitochondrial generation of H2O2 by Sod2 promoted endothelial cell sprouting in a three-dimensional in vitro angiogenesis assay that was attenuated by catalase coexpression or the PI3K inhibitor LY2949002. Moreover, Sod2 overexpression resulted in increased in vivo blood vessel formation that was H2O2-dependent as assessed by the chicken chorioallantoic membrane assay. Our findings provide the first evidence for the involvement of mitochondrial H2O2 in regulating PTEN function and the angiogenic switch, indicating that Sod2 can serve as an alternative physiological source of the potent signaling molecule, H2O2.