The tumour suppressor gene PTEN is mutated in a wide range of human cancers at a frequency roughly comparable with p53. In addition, germline PTEN mutations are associated with several dominant growth disorders. The molecular and cellular basis of these disorders has been elucidated by detailed in vivo genetic analysis in model organisms, in particular the fruit fly and mouse. Studies in the fly have shown that PTEN's growth regulatory functions are primarily mediated via its lipid phosphatase activity, which specifically reduces the cellular levels of phosphatidylinositol 3,4,5-trisphosphate. This activity antagonizes the effects of activated PI3-kinase in the nutritionally controlled insulin receptor pathway, thereby reducing protein synthesis and restraining cell and organismal growth, while also regulating other biological processes, such as fertility and ageing. Remarkably, this range of functions appears to be conserved in all higher organisms. PTEN also plays a role as a specialized cytoskeletal regulator, which, for example, is involved in directional movement of some migratory cells and may be important in metastasis. Furthermore, conditional knockouts in the mouse have recently revealed functions for PTEN in other processes, such as cell type specification and cardiac muscle contractility. Genetic approaches have therefore revealed a surprising diversity of global and cell type-specific PTEN-regulated functions that appear to be primarily controlled by modulation of a single phosphoinositide. Together with evidence from studies in cell culture that suggests links between PTEN and other growth regulatory genes such as p53, these studies provide new insights into PTEN-linked disorders and are beginning to suggest potential clinical strategies to combat these and other diseases.