Disruption of glandular architecture associates with poor clinical outcome in high-grade colorectal cancer (CRC). Phosphatase and tensin homolog deleted on chromosome ten (PTEN) regulates morphogenic growth of benign MDCK (Madin Darby Canine Kidney) cells through effects on the Rho-like GTPase cdc42 (cell division cycle 42). This study investigates PTEN-dependent morphogenesis in a CRC model. Stable short hairpin RNA knockdown of PTEN in Caco-2 cells influenced expression or localization of cdc42 guanine nucleotide exchange factors and inhibited cdc42 activation. Parental Caco-2 cells formed regular hollow gland-like structures (glands) with a single central lumen, in three-dimensional (3D) cultures. Conversely, PTEN-deficient Caco-2 ShPTEN cells formed irregular glands with multiple abnormal lumens as well as intra- and/or intercellular vacuoles evocative of the high-grade CRC phenotype. Effects of targeted treatment were investigated. Phosphatidinylinositol 3-kinase (PI3K) modulating treatment did not affect gland morphogenesis but did influence gland number, gland size and/or cell size within glands. As PTEN may be regulated by the nuclear receptor peroxisome proliferator-activated receptor-γ (PPARγ), cultures were treated with the PPARγ ligand rosiglitazone. This treatment enhanced PTEN expression, cdc42 activation and rescued dysmorphogenesis by restoring single lumen formation in Caco-2 ShPTEN glands. Rosiglitazone effects on cdc42 activation and Caco-2 ShPTEN gland development were attenuated by cotreatment with GW9662, a PPARγ antagonist. Taken together, these studies show PTEN-cdc42 regulation of lumen formation in a 3D model of human CRC glandular morphogenesis. Treatment by the PPARγ ligand rosiglitazone, but not PI3K modulators, rescued colorectal glandular dysmorphogenesis of PTEN deficiency.