The PTEN (phosphatase and tensin homologue deleted on chromosome 10) tumour suppressor is a phosphatidylinositol 3,4,5-trisphosphate [PtdIns(3,4,5)P(3)] 3-phosphatase that plays a critical role in regulating many cellular processes by antagonizing the phosphoinositide 3-kinase signalling pathway. We have identified and characterized two human homologues of PTEN, which differ with respect to their subcellular localization and lipid phosphatase activities. The previously cloned, but uncharacterized, TPTE (transmembrane phosphatase with tensin homology) is localized to the plasma membrane, but lacks detectable phosphoinositide 3-phosphatase activity. TPIP (TPTE and PTEN homologous inositol lipid phosphatase) is a novel phosphatase that occurs in several differentially spliced forms of which two, TPIP alpha and TPIP beta, appear to be functionally distinct. TPIP alpha displays similar phosphoinositide 3-phosphatase activity compared with PTEN against PtdIns(3,4,5)P(3), PtdIns(3,5)P(2), PtdIns(3,4)P(2) and PtdIns(3)P, has N-terminal transmembrane domains and appears to be localized on the endoplasmic reticulum. This is unusual as most signalling-lipid-metabolizing enzymes are not integral membrane proteins. TPIP beta, however, lacks detectable phosphatase activity and is cytosolic. TPIP has a wider tissue distribution than the testis-specific TPTE, with specific splice variants being expressed in testis, brain and stomach. TPTE and TPIP do not appear to be functional orthologues of the Golgi-localized and more distantly related murine PTEN2. We suggest that TPIP alpha plays a role in regulating phosphoinositide signalling on the endoplasmic reticulum, and might also represent a tumour suppressor and functional homologue of PTEN in some tissues.