Phosphatase and tensin homolog (PTEN) is a lipid and protein phosphatase that antagonizes signaling by the phosphatidylinositol 3-kinase (PI3K)-AKT signaling pathway. The PTEN gene is a major tumor suppressor, with mutations of this gene occurring frequently in tumors of humans and mice. We have now developed mutant medaka deficient in PTEN with the use of transcription activator-like effector nuclease (TALEN) technology. Medaka possesses two pten genes, ptena and ptenb, similar to zebrafish. We established 16 ptena mutant lines and two ptenb mutant lines. Homozygous single pten mutants were found to be viable and fertile. In contrast, pten double-knockout (dko) embryos manifested severe abnormalities in vasculogenesis, eye size, and tail development at 72 hours post fertilization(hpf) and died before hatching. Immunoblot analysis revealed that the ratio of phosphorylated to total forms of AKT (pAKT/AKT) in pten dko embryos was four times that in wild-type embryos, indicative of up-regulation of signaling by the PI3K-AKT pathway. Treatment of pten dko embryos with the PI3K inhibitor LY294002 reduced the pAKT/AKT ratio by about one-half and partially rescued the defect in vasculogenesis. Additional inhibitors of the PI3K-AKT pathway, including rapamycin and N-α-tosyl-L-phenylalanyl chloromethyl ketone, also partially restored vasculogenesis in the dko embryos. Our model system thus allows pten dko embryos to be readily distinguished from wild-type embryos at an early stage of development and is suitable for the screening of drugs able to compensate for PTEN deficiency.