Updated project metadata. The PTEN:P-Rex2 complex is a commonly mutated signaling nodes in metastatic cancer. The dual-specificity phosphatase PTEN canonically functions as a tumour suppressor by hydrolysing PI(3,4,5)P3 to PI(4,5)P2 to inhibit PI3K-AKT signaling. P-Rex2 is a RhoGTPase guanine nucleotide exchange factor activated by both Gβγ and PI(3,4,5)P3 downstream of G protein-coupled receptor and receptor tyrosine kinase signaling. Assembly of the PTEN:P-Rex2 complex inhibits the activity of both proteins, and its dysregulation can drive PI3K-AKT signaling and cell proliferation. However, structural insights into both PTEN:P-Rex2 complex assembly and its dysregulation by cancer-associated mutations remain limited. Here, using crosslinking mass spectrometry and functional studies, we provide mechanistic insights into PTEN:P-Rex2 complex assembly and co-inhibition. PTEN is anchored to P-Rex2 by interactions between the PTEN C-terminal tail PDZ-interacting motif and the second PDZ domain of P-Rex2. This interaction bridges PTEN across the P-Rex2 surface, occluding PI(3,4,5)P3 hydrolysis. Conversely, PTEN both allosterically promotes an autoinhibited P-Rex2 conformation and occludes Gβγ binding. These insights allow us to define a new gain-of-function class of cancer mutations within the PTEN:P-Rex2 interface that uncouples PTEN inhibition of Rac1 signaling. In addition, we observe synergy between PTEN deactivating and P-Rex2 truncation mutations that combine to drive Rac1 activation to a greater extent than either single mutation alone.