Protein phosphatase 2A (PP2A) enzyme consists of a heterodimeric core (AC core) comprising a scaffolding subunit (A), a catalytic subunit (C), and a variable regulatory subunit (B). Earlier studies suggest that upon DNA damage, a specific B subunit, B56γ, bridges the PP2A AC core to p53, leading to dephosphorylation of p53 at Thr-55, induction of the p53 transcriptional target p21, and the inhibition of cell proliferation and transformation. In addition to dephosphorylation of p53, B56γ-PP2A also inhibits cell proliferation and transformation by an unknown mechanism. B56γ contains 18 α-helices that are organized into eight HEAT (Huntington-elongation-A subunit-TOR) repeat motifs. Although previous crystal structure study has revealed the residues of B56γ that directly contact the A and C subunits, the contribution of HEAT repeats to holoenzyme assembly and to B56γ-PP2A tumor-suppressive function remains to be elucidated. Here, we show that HEAT repeat 1 is required for the interaction of B56γ with the PP2A AC core and, more importantly, for B56γ-PP2A tumor-suppressive function. Within this region, we identified a tumor-associated mutation, C39R, which disrupts the interaction of B56γ with the AC core and thus was unable to mediate dephosphorylation of p53 by PP2A. Furthermore, due to its lack of AC interaction, C39R was also unable to promote the p53-independent tumor-suppressive function of B56γ-PP2A. This study provides structural insight into the PP2A holoenzyme assembly and emphasizes the importance of HEAT repeat 1 in B56γ-PP2A tumor-suppressive function.