The serine-threonine protein phosphatase 2A (PP2A) is a heterotrimeric enzyme family that regulates numerous signaling pathways. Biallelic mutations of the structural PP2A Aβ subunit occur in several types of human tumors; however, the functional consequences of these cancer-associated PP2A Aβ mutations in cell transformation remain undefined. Here we show that suppression of PP2A Aβ expression permits immortalized human cells to achieve a tumorigenic state. Cancer-associated Aβ mutants fail to reverse tumorigenic phenotype induced by PP2A Aβ suppression, indicating that these mutants function as null alleles. Wild-type PP2A Aβ but not cancer-derived Aβ mutants form a complex with the small GTPase RalA. PP2A Aβ-containing complexes dephosphorylate RalA at Ser183 and Ser194, inactivating RalA and abolishing its transforming function. These observations identify PP2A Aβ as a tumor suppressor gene that transforms immortalized human cells by regulating the function of RalA.