PTEN is frequently mutated in a wide range of malignancies. Beyond suppressing tumorigenesis, PTEN is involved in multiple biological processes, and the complexity of PTEN function is partially attributed to PTEN family members including PTENα and PTENβ. Here, we report the identification of PTENε (also named as PTEN5), a novel N-terminal-extended PTEN isoform that suppresses tumor invasion and metastasis. We show that the translation of PTENε is initiated from the CUG816 codon within the 5’UTR region of PTEN mRNA. PTENε mainly localizes in the cell membrane, and physically associates with and dephosphorylates VASP and ACTR2, which govern filopodia formation and cell motility. We found that endogenous depletion of PTENε promotes filopodia formation and enhances the metastasis capacity of tumor cells. Overall, we identify a new isoform of PTEN with distinct localization and function compared to the known members of the PTEN family. These findings enrich the PTEN family constitution and advance our current understanding of the importance and diversity of PTEN functions.