The tensin family member cten (C-terminal tensin like) is an Src homology 2 (SH2) and phosphotyrosine binding domain-containing focal adhesion molecule that may function as a tumor suppressor. However, the mechanism has not been well established. We report that cten binds to another tumor suppressor, deleted in liver cancer 1 (DLC-1), and the SH2 domain of cten is responsible for the interaction. Unexpectedly, the interaction between DLC-1 and the cten SH2 domain is independent of tyrosine phosphorylation of DLC-1. By site-directed mutagenesis, we have identified several amino acid residues on cten and DLC-1 that are essential for this interaction. Mutations on DLC-1 perturb the interaction with cten and disrupt the focal adhesion localization of DLC-1. Furthermore, these DLC-1 mutants have lost their tumor suppression activities. When these DLC-1 mutants were fused to a focal adhesion targeting sequence, their tumor suppression activities were significantly restored. These results provide a novel mechanism whereby the SH2 domain of cten-mediated focal adhesion localization of DLC-1 plays an essential role in its tumor suppression activity.