The dual-specificity phosphatase PTEN/MMAC1/TEP1 has recently been identified as the tumor suppressor gene most frequently mutated and/or deleted in human tumors. Germline mutations of PTEN give rise to Cowden Disease (CD), an autosomal dominantly-inherited cancer syndrome which predisposes to increased risk of developing breast and thyroid tumors. However, PTEN mutations have rarely been detected in sporadic thyroid carcinomas. In this study, we confirm that PTEN mutations in sporadic thyroid cancer are infrequent as we found one point mutation and one heterozygous deletion of PTEN gene in 26 tumors and eight cell lines screened. However, we report that PTEN expression is reduced both at the mRNA and at the protein level - in five out of eight tumor-derived cell lines and in 24 out of 61 primary tumors. In most cases, decreased PTEN expression is correlated with increased phosphorylation of the PTEN-regulated protein kinase Akt/PKB. Moreover, we demonstrate that PTEN may act as a suppressor of thyroid cancerogenesis as the constitutive re-expression of PTEN into two different thyroid tumor cell lines markedly inhibits cell growth. PTEN-dependent inhibition of BrdU incorporation is accompanied by enhanced expression of the cyclin-dependent kinase inhibitor p27kip1 and can be overcome by simultaneous co-transfection of an excess p27kip1 antisense plasmid. Accordingly, in a subset of thyroid primary carcinomas and tumor-derived cell lines, a striking correlation between PTEN expression and the level of p27kip1 protein was observed. In conclusion, our findings demonstrate that inactivation of PTEN may play a role in the development of sporadic thyroid carcinomas and that one key target of PTEN suppressor activity is represented by the cyclin-dependent kinase inhibitor p27kip1.