The lipid- and protein phosphatase PTEN is one of the most frequently mutated tumor suppressor genes in human cancers and many mutations found in tumor samples directly affect PTEN phosphatase activity. In order to understand the functional consequences of these mutations in vivo, the aim of our study was to dissect the role of Pten phosphatase activities during zebrafish embryonic development. As in other model organisms, zebrafish mutants lacking functional Pten are embryonically lethal. Zebrafish have two pten genes and pten double homozygous zebrafish embryos develop a severe pleiotropic phenotype around 4 days post fertilization, which can be largely rescued by re-introduction of pten mRNA at the one-cell stage. We used this assay to characterize the rescue-capacity of Pten and variants with mutations that disrupt lipid, protein or both phosphatase activities. The pleiotropic phenotype at 4dpf could only be rescued by wild type Pten, indicating that both phosphatase activities are required for normal zebrafish embryonic development. An earlier aspect of the phenotype, hyperbranching of intersegmental vessels, however, was rescued by Pten that retained lipid phosphatase activity, independent of protein phosphatase activity. Lipid phosphatase activity was also required for moderating pAkt levels at 4 dpf. We propose that the role of Pten during angiogenesis mainly consists of suppressing PI3K signaling via its lipid phosphatase activity, whereas the complex process of embryonic development requires lipid and protein phosphatase of Pten.