Expression of the PTEN tumor suppressor is frequently lost in breast cancer in the absence of mutation or promoter methylation through as yet undetermined mechanisms. In this study, we demonstrate that the Rak tyrosine kinase physically interacts with PTEN and phosphorylates PTEN on Tyr336. Knockdown of Rak enhanced the binding of PTEN to its E3 ligase NEDD4-1 and promoted PTEN polyubiquitination, leading to PTEN protein degradation. Notably, ectopic expression of Rak effectively suppressed breast cancer cell proliferation, invasion, and colony formation in vitro and tumor growth in vivo. Furthermore, Rak knockdown was sufficient to transform normal mammary epithelial cells. Therefore, Rak acts as a bona fide tumor suppressor gene through the mechanism of regulating PTEN protein stability and function.