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Loss of the tumor suppressor PTEN is strongly associated with a lack of response to immune checkpoint blockade therapies in cancer patients, but the underlying mechanisms are not fully understood. We have developed a transformation model where knocking out PTEN in human mammary epithelial cells drives dependence on the p110β subunit of PI3K and, notably, elicits a robust induction of endogenous retroviral elements (ERVs) and activation of interferon signaling. This constitutive cell-intrinsic interferon response, hallmarked by hyperactivated STAT1, is also observed in human tumors with a PTEN-low status. We further found that PTEN deficiency renders cancer cells resistant to the cytotoxic effects of immune cells and interferon-γ. Notably, PTEN loss also results in a dependency on an activated DNA damage response pathway, leading to an exquisite vulnerability to CDK12 inhibition. Our study suggests an interferon adaptation model in which tumors driven by PTEN deficiency inherently activate the interferon response, enabling them to adapt to interferon cytotoxicity and gain resistance to immunotherapies.