We have recently identified mutually antagonizing signaling pathways that regulate podosome formation and invasive phenotypes in Src-transformed vascular smooth muscle cells and fibroblasts. Cross-talks between the anti-invasion p53-PTEN, and the pro-invasion Src-Stat3 and Src-PI3K-Akt pathways serve as a check and balance that dictates the outcome of either an invasive or non-invasive phenotype. Using a retrovirus vector encoding PTEN phosphatase mutants that retain either protein- or lipid-phosphatase activity on a Src(Y527F)background, we report here that both lipid- and protein-phosphatase activities of PTEN contribute to the suppression of Src-induced podosome formation and associated invasive phenotypes in rat aortic smooth muscle cells. This data suggests that p53 up-regulation of PTEN inhibits cell invasion via a two-prong mechanism: inactivating podosome agonists by its protein-phosphatase activity on the one hand, and antagonising the PI3K-Akt pathway by its lipid-phosphatase activity on the other.