The tumor suppressor gene PTEN, which is frequently mutated in human cancers, encodes a lipid phosphatase for phosphatidylinositol 3,4,5-triphosphate [PtdIns(3,4,5)P₃] and antagonizes phosphatidylinositol 3 kinase. Primordial germ cells (PGCs), which are the embryonic precursors of gametes, are the source of testicular teratoma. To elucidate the intracellular signaling mechanisms that underlie germ cell differentiation and proliferation, we have generated mice with a PGC-specific deletion of the Pten gene. Male mice that lacked PTEN exhibited bilateral testicular teratoma, which resulted from impaired mitotic arrest and outgrowth of cells with immature characters. Experiments with PTEN-null PGCs in culture revealed that these cells had greater proliferative capacity and enhanced pluripotent embryonic germ (EG) cell colony formation. PTEN appears to be essential for germ cell differentiation and an important factor in testicular germ cell tumor formation.