Mutations of the tumor suppressor PTEN, a phosphatase with specificity for 3-phosphorylated inositol phospholipids, accompany progression of brain tumors from benign to the most malignant forms. Tumor progression, particularly in aggressive and malignant tumors, is associated with the induction of angiogenesis, a process termed the angiogenic switch. Therefore, we tested whether PTEN regulates tumor progression by modulating angiogenesis. U87MG glioma cells stably reconstituted with PTEN cDNA were tested for growth in a nude mouse orthotopic brain tumor model. We observed that the reconstitution of wild-type PTEN had no effect on in vitro proliferation but dramatically decreased tumor growth in vivo and prolonged survival in mice implanted intracranially with these tumor cells. PTEN reconstitution diminished phosphorylation of AKT within the PTEN-reconstituted tumor, induced thrombospondin 1 expression, and suppressed angiogenic activity. These effects were not observed in tumors reconstituted with a lipid phosphatase inactive G129E mutant of PTEN, a result that provides evidence that the lipid phosphatase activity of PTEN regulates the angiogenic response in vivo. These data provide evidence that PTEN regulates tumor-induced angiogenesis and the progression of gliomas to a malignant phenotype via the regulation of phosphoinositide-dependent signals.