Pheochromocytomas, which are catecholamine-secreting tumors of neural crest origin, are frequently hereditary. However, the molecular basis of the majority of these tumors is unknown. We identified the transmembrane-encoding gene TMEM127 on chromosome 2q11 as a new pheochromocytoma susceptibility gene. In a cohort of 103 samples, we detected truncating germline TMEM127 mutations in approximately 30% of familial tumors and about 3% of sporadic-appearing pheochromocytomas without a known genetic cause. The wild-type allele was consistently deleted in tumor DNA, suggesting a classic mechanism of tumor suppressor gene inactivation. Pheochromocytomas with mutations in TMEM127 are transcriptionally related to tumors bearing NF1 mutations and, similarly, show hyperphosphorylation of mammalian target of rapamycin (mTOR) effector proteins. Accordingly, in vitro gain-of-function and loss-of-function analyses indicate that TMEM127 is a negative regulator of mTOR. TMEM127 dynamically associates with the endomembrane system and colocalizes with perinuclear (activated) mTOR, suggesting a subcompartmental-specific effect. Our studies identify TMEM127 as a tumor suppressor gene and validate the power of hereditary tumors to elucidate cancer pathogenesis.