Phosphatase and tensin homologue deleted from chromosome ten (PTEN) is a lipid phosphatase tumor suppressor that is lost or inactivated in most human tumors. The enzyme catalyzes the hydrolysis of phosphatidylinositol-(3,4,5)-trisphosphate (PIP3) to form phosphatidylinositol-(4,5)-bisphosphate (PIP2) and inorganic phosphate. Here, we report on the first continuous assay for the catalytic activity of PTEN. Using this assay, we demonstrate that human PTEN is activated by the reaction product PIP2, as well as in solutions of low salt concentration. This activation is abrogated in the K13A variant, which has a disruption in a putative binding site for PIP2. We also demonstrate that PTEN-L, which derives from alternative translation of the PTEN mRNA, is activated constitutively. These findings have implications for catalysis by PTEN in physiological environments and could expedite the development of PTEN-based chemotherapeutic agents.