The PTEN tumor suppressor is mutated in diverse human cancers and in hereditary cancer predisposition syndromes. PTEN is a phosphatase that can act on both polypeptide and phosphoinositide substrates in vitro. The PTEN structure reveals a phosphatase domain that is similar to protein phosphatases but has an enlarged active site important for the accommodation of the phosphoinositide substrate. The structure also reveals that PTEN has a C2 domain. The PTEN C2 domain binds phospholipid membranes in vitro, and mutation of basic residues that could mediate this reduces PTEN's membrane affinity and its ability to suppress the growth of glioblastoma tumor cells. The phosphatase and C2 domains associate across an extensive interface, suggesting that the C2 domain may serve to productively position the catalytic domain on the membrane.