Although tremendous progress has been made in understanding the functions of Phosphatase and tensin homolog deleted on chromosome 10 (PTEN) in tumor cells, only recently have tumor cell-non-autonomous PTEN actions within the tumor microenvironment (TME) been appreciated. While it is accepted that the TME actively communicates with cancer cells to influence disease progression, our understanding of the genes and pathways responsible is still evolving. Given that inactivation of PTEN in the stroma is correlated with worse outcomes in human cancers, determining the unique functions and mechanisms of PTEN regulation in various TME cell compartments is essential. In this review, the evidence for PTEN function in different TME cell compartments, the mechanisms governing PTEN inactivation, and the downstream pathways regulated by PTEN that are critical for intracellular communication, are covered. The potential clinical implications of these findings as well as the future directions for the study of stromal PTEN are discussed.