The lipid- and protein phosphatase PTEN is an essential tumor suppressor that is highly conserved among all higher eukaryotes. As an antagonist of the PI3K/Akt cell survival and proliferation pathway, it exerts its most prominent function at the cell membrane, but (PIP3-independent) functions of nuclear PTEN have been discovered as well. PTEN subcellular localization is tightly controlled by its protein conformation. In the closed conformation, PTEN localizes predominantly to the cytoplasm. Opening up of the conformation of PTEN exposes N-terminal and C-terminal regions of the protein that are required for both interaction with the cell membrane and translocation to the nucleus. Lack of Pten leads to hyperbranching of the intersegmental vessels during zebrafish embryogenesis, which is rescued by expression of exogenous Pten. Here, we observed that expression of mutant PTEN with an open conformation rescued the hyperbranching phenotype in pten double homozygous embryos and suppressed the increased p-Akt levels that are characteristic for embryos lacking Pten. In addition, in pten mutant and wild type embryos alike, open conformation PTEN induced stalled intersegmental vessels, which fail to connect with the dorsal longitudinal anastomotic vessel. Functional hyperactivity of open conformation PTEN in comparison to wild type PTEN seems to result predominantly from its enhanced recruitment to the cell membrane. Enhanced recruitment of phosphatase inactive mutants to the membrane did not induce the stalled vessel phenotype nor did it rescue the hyperbranching phenotype in pten double homozygous embryos, indicating that PTEN phosphatase activity is indispensable for its regulatory function during angiogenesis. Taken together, our data suggest that PTEN phosphatase activity needs to be carefully fine-tuned for normal embryogenesis and that the control of its subcellular localization is a key mechanism in this process.