PTEN (also known as MMAC-1 or TEP-1) is one of the most frequently mutated tumor suppressors in human cancer. It is also essential for embryonic development. PTEN functions primarily as a lipid phosphatase to regulate crucial signal transduction pathways; a key target is phosphatidylinositol 3,4,5-trisphosphate. In addition, it displays weak tyrosine phosphatase activity, which may downmodulate signaling pathways that involve focal adhesion kinase (FAK) or Shc. Levels of PTEN are regulated in embryos and adult organisms, and gene-targeting studies demonstrate that it has a crucial role in normal development. Functions for PTEN have been identified in the regulation of many normal cell processes, including growth, adhesion, migration, invasion and apoptosis. PTEN appears to play particularly important roles in regulating anoikis (apoptosis of cells after loss of contact with extracellular matrix) and cell migration. Gene targeting and transient expression studies have provided insight into the specific signaling pathways that regulate these processes. Characterization of the diverse signaling networks modulated by PTEN, as well as the regulation of PTEN concentration, enzymatic activity, and coordination with other phosphatases, should provide intriguing new insight into the biology of normal and malignant cells.