Background: Germ-line and sporadic mutations in the tumor suppressor gene PTEN (also known as MMAC or TEP1), which encodes a dual-specificity phosphatase, cause a variety of cancers such as Cowden disease, glioblastoma, endometrial carcinoma and prostatic cancer. PTEN is widely expressed, and Cowden disease consistently affects various organ systems, suggesting that the PTEN protein must have an important, although as yet poorly understood, function in cellular physiology.Results: Homozygous mutant mice lacking exons 3–5 of the PTEN gene (mPTEN3–5) had severely expanded and abnormally patterned cephalic and caudal regions at day 8.5 of gestation. Embryonic death occurred by day 9.5 and was associated with defective chorio-allantoic development. Heterozygous mPTEN3–5 mice had an increased incidence of tumors, especially T-cell lymphomas; γ-irradiation reduced the time lapse of tumor formation. DNA analysis of these tumors revealed the deletion of the mPTEN gene due to loss of heterozygosity of the wild-type allele. Tumors associated with loss of heterozygosity in mPTEN showed elevated phosphorylation of protein kinase B (PKB, also known as Akt kinase), thus providing a functional connection between mPTEN and a murine proto-oncogene (c-Akt) involved in the development of lymphomas.Conclusions: The mPTEN gene is fundamental for embryonic development in mice, as mPTEN3–5 mutant embryos died by day 9.5 of gestation, with patterning defects in cephalic and caudal regions and defective placentation. Heterozygous mice developed lymphomas associated with loss of heterozygosity of the wild-type mPTEN allele, and tumor appearance was accelerated by γ-irradiation. These lymphomas had high levels of activated Akt/PKB, the protein product of a murine proto-oncogene with anti-apoptotic function, associated with thymic lymphomas. This suggests that tumors associated with mPTEN loss of heterozygosity may arise as a consequence of an acquired survival advantage. We provide direct evidence of the role of mPTEN as a tumor suppressor gene in mice, and establish the mPTEN mutant mouse as an experimental model for investigating the role of PTEN in cancer progression.