Pten controls a signaling axis that is implicated to regulate cell proliferation, growth, survival, migration, and metabolism. The molecular mechanisms underlying the specificity of Pten responses to such diverse cellular functions are currently poorly understood. Here we report the control of Pten activity and signaling specificity during the cell cycle by Ndfip1 regulation of Pten spatial distribution. Genetic deletion of Ndfip1 resulted in a loss of Pten nuclear compartmentalization and increased cell proliferation, despite cytoplasmic Pten remaining active in regulating PI3K/Akt signaling. Cells lacking nuclear Pten were found to have dysregulated levels of Plk1 and cyclin D1 that could drive cell proliferation. In vivo, transgene expression of Ndfip1 in the developing brain increased nuclear Pten and lengthened the cell cycle of neuronal progenitors, resulting in microencephaly. Our results show that local partitioning of Pten from the cytoplasm to the nucleus represents a key mechanism contributing to the specificity of Pten signaling during cell proliferation.