An interesting but largely unanswered question in biology is how eukaryotic organisms precisely regulate the size of multicellular tissues or groups of cells. Developing Dictyostelium cells aggregate in dendritic streams using relayed pulses of adenosine 3'5'-cyclic monophosphate (cAMP) as a chemoattractant to form ∼20,000-cell fruiting bodies. Counting factor (CF), a secreted protein complex, regulates group size by increasing cell motility and decreasing cell-cell adhesion to induce the breakup of excessively large aggregation streams. We used a second-site suppressor screen by conducting random insertional mutagenesis in smlA- cells which over-secrete CF to search for CF signal transduction components, and found that an insertion in the cnrN gene affects group size. Cells lacking CnrN (cnrN- cells) form small aggregation territories with few streams, which then form small fruiting bodies. Expressing CnrN in cnrN- cells rescues the abnormal phenotype. Computer simulations suggested that in the absence of stream formation, CF should be unable to affect group size. As predicted, cnrN- group size is insensitive to the addition or depletion of CF, even though CF regulates the motility of cnrN - cells. cnrN- cells have excessively large cAMP-stimulated cAMP pulses, and the small territory phenotype can be rescued by developing cells in the presence of the cAMP-hydrolyzing enzyme cAMP phosphodiesterase or simply by starving cells at low densities. The predicted amino acid sequence of CnrN has similarity to phosphatase and tensin homologs (PTENs). PTENs play a key role in inhibiting phosphatidylinositol 3' kinase (PI3K) dependent pathways. In Dictyostelium, cAMP pulses activate PI3Ks, and activated PI3Ks in turn stimulate adenylyl cyclase to produce cAMP. As indicated by the sequence similarity of CnrN to PTEN, in response to cAMP stimulation, cnrN- cells show elevated and extended activation of PI3K-dependent pathways, including PIP3 accumulation, Akt activation, actin polymerization, and adenylyl cyclase-catalysed cAMP production. Our results suggest that CnrN has functional similarity to PTEN and regulates the cAMP pulse size by negatively regulating PI3K-dependent pathways, and that CnrN-mediated regulation on territory and stream formation may use a CF-independent mechanism.