PTEN phosphatase is a potent tumor suppressor that regulates multiple cellular functions. In the cytoplasm, PTEN dephosphorylates its primary lipid substrate, phosphatidylinositol 3,4,5-trisphosphate, to antagonize the phosphatidylinositol 3-kinase (PI3K)/AKT signaling pathway. It has also become increasingly evident that PTEN functions in the nucleus and may play an important part in transcription regulation, but its nuclear targets remain elusive. In this report, we demonstrate the transcription factor cyclic AMP response element-binding protein (CREB) is a protein target of PTEN phosphatase and that PTEN deficiency leads to CREB phosphorylation independent of the PI3K/AKT pathway. Using confocal immunofluorescence and reciprocal immunoprecipitation, we further show that PTEN colocalizes with CREB and physically interacts with CREB. Moreover, we use both in vitro and in vivo experiments to show PTEN can dephosphorylate CREB in a phosphatase-dependent manner, suggesting that CREB is a substrate of PTEN nuclear phosphatase. Loss of Pten results in an elevated RNA level of multiple CREB transcriptional targets and increased cell proliferation, which can be reversed by a nonphosphorylatable CREB mutant or knockdown of CREB. These data reveal a mechanism for PTEN modulation of CREB-mediated gene transcription and cell growth. Our study thus characterizes PTEN as a nuclear phophatase of a transcription factor and identifies CREB as a novel protein target of PTEN phosphatase, which contributes to better understanding of PTEN function in the nucleus. Cancer Res; 71(8); 2821–5. ©2011 AACR.