The tumor suppressor PTEN is a lipid phosphatase that is found mutated in different types of human cancers. PTEN suppresses cell proliferation by inhibiting the PI3K-Akt signaling pathway at the cell membrane. However, PTEN is also demonstrated to localize in the cell nucleus where it exhibits tumor suppressive activity via a different, unknown mechanism. In this study we report that PTEN also localizes to the nucleolus and that nucleolar PTEN plays an important role in regulating nucleolar homeostasis and maintaining nucleolar morphology. Overexpression of nuclear PTEN in PTEN null cells inhibits Akt phosphorylation and reduces cell size. Knockdown of PTEN in PTEN positive cells leads to nucleolar morphologic changes and an increase in the proportion of cells with a greater number of nucleoli. In addition, knockdown of PTEN in PTEN positive cells increased ribosome biogenesis. These findings expand current understanding of function and relevance of nuclear localized PTEN and provide a foundation for the development of novel therapies targeting PTEN.