Mutations of PTEN, which encodes a protein-tyrosine and lipid phosphatase, are prevalent in a variety of human cancers. The human genome 'draft' sequence still lacks organization and much of the PTEN and adjacent loci remain undefined. The pufferfish, Fugu rubripes, by virtue of having a compact genome represents an excellent template for rapid vertebrate gene discovery. Sequencing of 56 kb from the Fugu pten (fpten) locus identified four complete genes and one partial gene homologous to human genes. Genes neighboring fpten include a PAPS synthase (fpapss2) differentially expressed between non-metastatic/metastatic human carcinoma cell lines, an inositol phosphatase (fminpp1) and an omega class glutathione-S-transferase (fgsto). We have determined the order of human BAC clones at the hPTEN locus and that the locus contains hPAPSS2 and hMINPP1 genes oriented as are their Fugu orthologs. Although the human genes span 500 kb, the Fugu genes lie within only 22 kb due to the compressed intronic and intergenic regions that typify this genome. Interestingly, and providing striking evidence of regulatory element conservation between widely divergent vertebrate species, the compact 2.1 kb fpten promoter is active in human cells. Also, like hPTEN, fpten has a growth and tumor suppressor activity in human glioblastoma cells, demonstrating conservation of protein function.