Tumour suppressor phosphatase and tensin homologue deleted on chromosome 10 (PTEN) is a lipid phosphatase that negatively regulates growth factor-induced survival signalling. Here, we demonstrate that PTEN attenuates epidermal growth factor receptor (EGFR) signalling by promoting late endosome maturation by virtue of its protein phosphatase activity. Loss of PTEN impairs the transition of ligand-bound EGFR from early to late endosomes. We unveil Rab7, a critical GTPase for endosome maturation, as a functional PTEN interacting partner. PTEN dephosphorylates Rab7 on two conserved residues S72 and Y183, which are necessary for GDP dissociation inhibitor (GDI)-dependent recruitment of Rab7 on to late endosomes and subsequent maturation. Thus, our findings reveal PTEN-dependent endosome maturation through phosphoregulation of Rab7 as an important route of controlling EGFR signalling.