Skin cancer is the most common cancer in the United States. UV radiation in sunlight is the major environmental factor causing skin cancer development. PTEN (phosphatase and tensin homolog deleted on chromosome 10), a recently discovered tumor suppressor gene, is frequently mutated, deleted, or epigenetically silenced in various human cancers. PTEN negatively regulates the oncogenic phosphatidylinositol 3-kinase (PI3K)/protein kinase B (AKT) signaling pathways. PTEN is clearly a critical tumor suppressor for skin cancer in humans and in mice. This review summarizes the recent progress in the function of PTEN in the development of skin cancer, including basal-cell carcinoma, squamous-cell carcinoma, and melanoma. The regulation of PTEN by UV radiation is also discussed in association with skin carcinogenesis. Understanding the fundamental mechanisms that lead to the reduction of PTEN function in skin carcinogenesis and the essential association with UV radiation opens up new opportunities for molecular chemoprevention and therapy of skin cancer by targeting PTEN pathways.