PTEN is a tumour suppressor with phosphatase activity in vitro against both lipids and proteins and other potential non-enzymatic mechanisms of action. Although the importance of PTEN's lipid phosphatase activity in regulating the PI3K signalling pathway is recognized, the significance of PTEN's other mechanisms of action is currently unclear. In this study, we describe the systematic identification of a PTEN mutant, PTEN Y138L, with activity against lipid, but not soluble substrates. Using this mutant, we provide evidence for the interfacial activation of PTEN against lipid substrates. We also show that when re-expressed at physiological levels in PTEN null U87MG glioblastoma cells, the protein phosphatase activity of PTEN is not required to regulate cellular PtdInsP 3 levels or the downstream protein kinase Akt/PKB. Finally, in three-dimensional Matrigel cultures of U87MG cells similarly re-expressing PTEN mutants, both the protein and lipid phosphatase activities were required to inhibit invasion, but either activity alone significantly inhibited proliferation, albeit only weakly for the protein phosphatase activity. Our data provide a novel tool to address the significance of PTEN's separable lipid and protein phosphatase activities and suggest that both activities suppress proliferation and together suppress invasion.