PHLPP2 (PH domain leucine-rich repeat protein phosphatase 2) terminates Akt and protein kinase C (PKC) activity by specifically dephosphorylating these kinases at a key regulatory site, the hydrophobic motif (Ser-473 in Akt1). Here we identify a polymorphism that results in an amino acid change from a Leu to Ser at codon 1016 in the phosphatase domain of PHLPP2, which reduces phosphatase activity toward Akt both in vitro and in cells, in turn resulting in reduced apoptosis. Depletion of endogenous PHLPP2 variants in breast cancer cells revealed the Ser-1016 variant is less functional toward both Akt and PKC. In pair-matched high grade breast cancer samples we observed retention of only the Ser allele from heterozygous patients (identical results were observed in a pair-matched normal and tumor cell line). Thus, we have identified a functional polymorphism that impairs the activity of PHLPP2 and correlates with elevated Akt phosphorylation and increased PKC levels.