Malek et al. show that the tumor suppressor PTEN acts as a PI(3,4)P2 3-phosphatase within the growth factor-stimulated PI3K signaling network, in addition to its accepted role as a PI(3,4,5)P3 3-phosphatase. This suggests that specific PI(3,4)P2 effector functions, such as invadopodia formation, play a role in the PTEN-loss-of-function phenotype.