K63-linked ubiquitination of Akt is a posttranslational modification that plays a critical role in growth factor-mediated membrane recruitment and activation of Akt. Although E3 ligases involved in growth factor-induced ubiquitination of Akt have been defined, the deubiquitinating enzyme (DUB) that triggers deubiquitination of Akt and the function of Akt deubiquitination remain largely unclear. We showed that CYLD was a DUB for Akt and suppressed growth factor-mediated ubiquitination and activation of Akt. CYLD directly removed ubiquitin moieties from Akt under serum-starved conditions. CYLD dissociated from Akt upon growth factor stimulation, thereby allowing E3 ligases to induce ubiquitination and activation of Akt. CYLD deficiency also promoted cancer cell proliferation, survival, glucose uptake, and, when injected into mice, growth of prostate tumors. Our findings reveal the crucial role of cycles of ubiquitination and deubiquitination of Akt in determining its plasma membrane localization and activation - and further identify CYLD as a molecular switch for these processes.