The tumor suppressor PTEN is a phosphatidylinositol phospholipid phosphatase, which indirectly down-regulates the activity of the protein kinase B/Akt survival kinases. Examination of sequence data bases revealed the existence of a highly conserved homologue of PTEN. This homologue, termed PTEN 2, contained an extended amino-terminal domain having four potential transmembrane motifs, a lipid phosphatase domain, and a potential lipid-binding C2 domain. Transcript analysis demonstrated that PTEN 2 is expressed only in testis and specifically in secondary spermatocytes. In contrast to PTEN, PTEN 2 was localized to the Golgi apparatus via the amino-terminal membrane-spanning regions. Molecular modeling suggested that PTEN 2 is a phospholipid phosphatase with potential specificity for the phosphate at the 3 position of inositol phosphates. Enzymatic analysis of PTEN 2 revealed substrate specificity that is similar to PTEN, with a preference for the dephosphorylation of the phosphatidylinositol 3,5-phosphate phospholipid, a known mediator of vesicular trafficking. Together, these data suggest that PTEN 2 is a Golgi-localized, testis-specific phospholipid phosphatase, which may contribute to the terminal stages of spermatocyte differentiation.