The tumour suppressor gene PTEN/MMAC1/TEP1 encodes a dual-specificity phosphatase that recognizes phosphatidylinositol-3,4,5-triphosphate and protein substrates. We have shown previously that over-expression of PTEN in a tetracycline-controlled inducible system blocks cell cycle progression and induces apoptosis in MCF-7 breast cancer cells. Here, we demonstrate that over-expression of wild-type PTEN leads to the suppression of cell growth through the blockade of cell cycle progression, an increase in the abundance of p27, a decrease in the protein levels of cyclin D1 and the inhibition of Akt phosphorylation. In contrast, expression of the phosphatase-dead mutant, C124S, promotes cell growth and has the opposite effect on the abundance of p27, cyclin D1 levels and the phosphorylation of Akt. The G129E mutant, which does not have lipid phosphatase activity but retains protein phosphatase activity, behaves like C124S except that the former causes decreases in cyclin D1 levels similar to wild-type PTEN. Therefore, PTEN exerts its growth suppression through lipid phosphatase-dependent and independent activities and most likely, via the coordinate effect of both protein phosphatase and lipid phosphatase activities. Addition of either estrogen or insulin abrogates PTEN-mediated up-regulation of p27 and partially blocks PTEN-mediated growth suppression, whereas the combination of estrogen and insulin eliminates the alterations of p27 and cyclin D1 and completely blocks PTEN-mediated growth suppression. Our findings demonstrate that PTEN blocks cell cycle progression differentially through down-regulating the positive cell cycle regulator, cyclin D1, by its protein phosphatase activity, and up-regulating the negative cell cycle regulator, p27, by its lipid phosphatase activity.