Adhesion between epithelial cells mediates apical–basal polarization, cell proliferation, and survival, and defects in adhesion junctions are associated with abnormalities from degeneration to cancer. We found that the maintenance of specialized adhesions between cells of the retinal pigment epithelium (RPE) requires the phosphatase PTEN. RPE-specific deletion of the mouse pten gene results in RPE cells that fail to maintain basolateral adhesions, undergo an epithelial-to-mesenchymal transition (EMT), and subsequently migrate out of the retina entirely. These events in turn lead to the progressive death of photoreceptors. The C-terminal PSD-95/Dlg/ZO-1 (PDZ)-binding domain of PTEN is essential for the maintenance of RPE cell junctional integrity. Inactivation of PTEN, and loss of its interaction with junctional proteins, are also evident in RPE cells isolated from ccr2^−/− mice and from mice subjected to oxidative damage, both of which display age-related macular degeneration (AMD). Together, these results highlight an essential role for PTEN in normal RPE cell function and in the response of these cells to oxidative stress.