Crosstalk between the phosphatidylinositol 3-kinase (PI3K) and the transforming growth factor-β signalling pathways play an important role in regulating many cellular functions. However, the molecular mechanisms underpinning this crosstalk remain unclear. Here, we report that PI3K signalling antagonizes the Activin-induced definitive endoderm (DE) differentiation of human embryonic stem cells by attenuating the duration of Smad2/3 activation via the mechanistic target of rapamycin complex 2 (mTORC2). Activation of mTORC2 regulates the phosphorylation of the Smad2/3-T220/T179 linker residue independent of Akt, CDK and Erk activity. This phosphorylation primes receptor-activated Smad2/3 for recruitment of the E3 ubiquitin ligase Nedd4L, which in turn leads to their degradation. Inhibition of PI3K/mTORC2 reduces this phosphorylation and increases the duration of Smad2/3 activity, promoting a more robust mesendoderm and endoderm differentiation. These findings present a new and direct crosstalk mechanism between these two pathways in which mTORC2 functions as a novel and critical mediator.