The phosphatase and tensin homolog deleted on chromosome ten (PTEN) and myotubularin (MTM1) represent subfamilies of protein tyrosine phosphatases whose principal physiological substrates are D3-phosphorylated inositol phospholipids. As lipid phosphatases, PTEN- and MTM1-related (MTMR) proteins dephosphorylate the products of phosphoinositide 3-kinases and antagonize downstream effectors that utilize 3-phosphoinositides as ligands for protein targeting domains or allosteric activation. Here, we describe the cellular mechanisms of PTEN and MTMR function and their role in the etiology of cancer and other human diseases.