The PTEN gene is a tumor suppressor localized in the frequently altered chromosomal region 10q23. The tumor suppressor function of the PTEN protein (PTEN) has been linked to its ability to dephosphorylate the lipid second-messenger phosphatidylinositol 3,4,5-trisphosphate and phosphatidylinositol 3,4-bisphosphate and, by doing so, to antagonize the phosphoinositide 3-kinase pathway. The PTEN protein consists of an amino-terminal phosphatase domain, a lipid binding C2 domain, and a 50-amino-acid C-terminal domain (the “tail”) of unknown function. A number of studies have shown that the tail is dispensable for both phosphatase activity and blocking cell growth. Here, we show that the PTEN tail is necessary for maintaining protein stability and that it also acts to inhibit PTEN function. Thus, removing the tail results in a loss of stability but does not result in a loss of function because the resultant protein is more active. Furthermore, tail-dependent regulation of stability and activity is linked to the phosphorylation of three residues (S380, T382, and T383) within the tail. Therefore, the tail is likely to mediate the regulation of PTEN function through phosphorylation.