Germline mutations in LKB1 (also known as STK11) are associated with Peutz-Jeghers syndrome (PJS), a disorder with predisposition to gastrointestinal polyposis and cancer. PJS polyps are unusual neoplasms characterized by marked epithelial and stromal overgrowth but have limited malignant potential. Here we show that Lkb1(+/-) mice develop intestinal polyps identical to those seen in individuals affected with PJS. Consistent with this in vivo tumour suppressor function, Lkb1 deficiency prevents culture-induced senescence without loss of Ink4a/Arf or p53. Despite compromised mortality, Lkb1(-/-) mouse embryonic fibroblasts show resistance to transformation by activated Ha-Ras either alone or with immortalizing oncogenes. This phenotype is in agreement with the paucity of mutations in Ras seen in PJS polyps and suggests that loss of Lkb1 function as an early neoplastic event renders cells resistant to subsequent oncogene-induced transformation. In addition, the Lkb1 transcriptome shows modulation of factors linked to angiogenesis, extracellular matrix remodelling, cell adhesion and inhibition of Ras transformation. Together, our data rationalize several features of PJS polyposis--notably its peculiar histopathological presentation and limited malignant potential--and place Lkb1 in a distinct class of tumour suppressors.