Glioblastoma (GBM) is the most aggressive and frequent type of primary brain cancer in adult patients. One of the key molecular features associated with GBM pathogenesis is the dysfunction of PTEN oncosuppressor. In addition to PTEN gene, humans and several primates possess processed PTEN pseudogene (PTENP1) that gives rise to long non-coding RNA lncPTENP1-S. Regulation and functions of PTEN and PTENP1 are highly interconnected, however, the exact molecular mechanism of how these two genes affect each other remains unclear. Here, we analyzed the methylation level of the CpG islands (CpGIs) in the promoter regions of PTEN and PTENP1 in patient-derived GBM neurospheres. We found that increased PTEN methylation corelates with decreased PTEN mRNA level. Unexpectedly, we showed the opposite trend for PTENP1. Using targeted methylation and demethylation of PTENP1 CpGI, we demonstrated that DNA methylation increases lncPTENP1-S expression in the presence of wild type PTEN protein but decreases lncPTENP1-S expression if PTEN protein is absent. Further experiments revealed that PTEN protein binds to PTENP1 promoter region and inhibits lncPTENP1-S expression if its CpGI is demethylated. Interestingly, we did not detect any effect of lncPTENP1-S on the level of PTEN mRNA, indicating that in GBM cells PTENP1 is a downstream target of PTEN rather than its upstream regulator. Finally, we studied the functions of lncPTENP1-S and demonstrated that it plays a pro-oncogenic role in GBM cells by upregulating the expression of cancer stem cell markers and decreasing cell adhesion.