PHLPP (PH domain leucine-rich repeats protein phosphatase) represents a family of novel Ser/Thr protein phosphatases. Two highly related isoforms in this family, PHLPP1 and PHLPP2, have been identified to serve as negative regulators of Akt and protein kinase C by dephosphorylating the kinases directly. In this study, we examined the expression pattern of both PHLPP isoforms in colorectal cancer specimens and the adjacent normal mucosa using immunohistochemical staining. We found that the expression of PHLPP1 or PHLPP2 isoform was lost or decreased in 78 and 86% of tumor tissues, respectively. Stable overexpression of either PHLPP isoform in colon cancer cells decreased the rate of cell proliferation and sensitized the cells to growth inhibition induced by the phosphoinositide-3 kinase inhibitor, LY294002, whereas knockdown of either PHLPP isoform by shRNA promoted the proliferation of DLD1 cells. In addition, we demonstrated that the PHLPP-mediated growth inhibition in colon cancer cells was largely rescued by overexpression of a constitutively active Akt. Moreover, reexpression of either PHLPP isoform in HCT116 cells inhibited tumor growth in vivo. Taken together, our results strongly support a tumor suppressor role of PHLPP in colon cancer.