The PRL-1, PRL-2, and PRL-3 phosphatases are prenylated protein tyrosine phosphatases with oncogenic activity that are proposed to drive tumor metastasis. We found that PRL-2 mRNA is elevated in primary breast tumors relative to matched normal tissue, and also dramatically elevated in metastatic lymph nodes compared with primary tumors. PRL-2 knockdown in metastatic MDA-MB-231 breast cancer cells decreased anchorage-independent growth and cell migration, suggesting that the malignant phenotype of these cells is mediated at least in part through PRL-2 signaling. In different mouse mammary tumor–derived cell lines overexpressing PRL-2, we confirmed its role in anchorage-independent growth and cell migration. Furthermore, injection of PRL-2–overexpressing cells into the mouse mammary fat pad promoted extracellular signal-regulated kinase 1/2 activation and tumor formation. MMTV–PRL-2 transgenic mice engineered to overexpress the enzyme in mammary tissue did not exhibit spontaneous tumorigenesis, but they exhibited an accelerated development of mammary tumors initiated by introduction of an MMTV-ErbB2 transgene. Together, our results argue that PRL-2 plays a role in breast cancer progression. Cancer Res; 70(21); 8959–67. ©2010 AACR.