The tumor suppressor, PTEN, is one of the most commonly mutated genes in cancer. Recently, PTEN has been shown to localize in the nucleus and is required to maintain genomic stability. Here, we show that nuclear PTEN, independent of its phosphatase activity, is essential for maintaining heterochromatin structure. Depletion of PTEN leads to loss of heterochromatic foci, decreased chromatin compaction, overexpression of heterochromatic genes, and reduced protein stability of heterochromatin protein 1 a. We found that the C-terminus of PTEN is required to maintain heterochromatin structure. Additionally, cancer-associated PTEN mutants lost their tumor-suppressor function when their heterochromatin structure was compromised. We propose that this novel role of PTEN accounts for its function in guarding genomic stability and suppressing tumor development.