PTEN/MMAC1/TEP1 (PTEN, phosphatase deleted on chromosome ten; MMAC1, mutated in multiple advanced cancers; TEP1, tensin-like phosphatase) is a major human tumor suppressor gene whose suppressive activity operates on the phosphatidylinositol pathway. A single homologue of this gene, TEP1 (YNL128w) , exists in the budding yeast Saccharomyces cerevisiae . Yeast strains deleted for TEP1 exhibit essentially no phenotype in haploids; however, diploids exhibit resistance to the phosphatidylinositol-3-phosphate kinase inhibitor wortmannin and to lithium ions. Although rates of cancer increase with age, neither tep1 haploids nor diploids have altered life spans. TEP1 RNA is present throughout the cell cycle, and levels are dramatically up-regulated during meiotic development. Although homozygous tep1 mutants initiate the meiotic program and form spores with wild-type kinetics, analysis of the spores produced in tep1 mutants indicates a specific defect in the trafficking or deposition of dityrosine, a major component of yeast spore walls, to the surface. Introduction of a common PTEN mutation found in human tumors into the analogous position in Tep1p produces a nonfunctional protein based on in vivo activity. These studies implicate Tep1p in a specific developmental trafficking or deposition event and suggest that Tep1p, like its mammalian counterpart, impinges on the phosphatidylinositol pathway.