Tumor suppressor. Acts as a dual-specificity protein phosphatase; dephosphorylating tyrosine-; serine- and threonine- phosphorylated proteins. Also acts as a lipid phosphatase; removing the phosphate in the D3 position of the inositol ring from phosphatidylinositol 3;4;5-trisphosphate; phosphatidylinositol 3;4-diphosphate; phosphatidylinositol 3- phosphate and inositol 1;3;4;5-tetrakisphosphate with order of substrate preference in vitro PtdIns(3;4;5)P3 > PtdIns(3;4)P2 > PtdIns3P > Ins(1;3;4;5)P4. The lipid phosphatase activity is critical for its tumor suppressor function. Antagonizes the PI3K- AKT/PKB signaling pathway by dephosphorylating phosphoinositides and thereby modulating cell cycle progression and cell survival. The unphosphorylated form cooperates with AIP1 to suppress AKT1 activation. Dephosphorylates tyrosine-phosphorylated focal adhesion kinase and inhibits cell migration and integrin-mediated cell spreading and focal adhesion formation. Plays a role as a key modulator of the AKT-mTOR signaling pathway controlling the tempo of the process of newborn neurons integration during adult neurogenesis; including correct neuron positioning; dendritic development and synapse formation. May be a negative regulator of insulin signaling and glucose metabolism in adipose tissue. The nuclear monoubiquitinated form possesses greater apoptotic potential; whereas the cytoplasmic nonubiquitinated form induces less tumor suppressive ability. In motile cells; suppresses the formation of lateral pseudopods and thereby promotes cell polarization and directed movement.