Pleckstrin homology (PH) domain leucine-rich repeat protein phosphatase 2 (PHLPP2) is a critical regulator of cellular homeostasis and acts as a tumor suppressor in multiple human cancers. However, its exact biological function in colorectal cancer (CRC) and the underlying molecular mechanism remain poorly understood. The correlation between the transcription and protein abundance of PHLPP2 was analyzed using proteomic and corresponding transcriptional data. Immunohistochemistry was used to validate the protein expression and the role of PHLPP2 in patient prognosis. In addition, a series of experiments in vitro and in vivo were performed to investigate the underlying molecular mechanism. Immunohistochemical staining of a CRC tissue microarray revealed that PHLPP2 protein expression was significantly downregulated compared to that in adjacent normal tissues. Low expression of PHLPP2 was an independent prognostic risk factor for poor survival. A nomogram established by integrating PHLPP2 expression and traditional clinicopathological factors achieved more reliable prognostic assessment in CRC patients. Additionally, PHLPP2 overexpression suppressed CRC cell migration, invasion and stemness in vitro as well as tumorigenesis in vivo. Further experiments revealed that upregulation of PHLPP2 increased ROS levels by suppressing the Nrf2-ARE signaling pathway, which inhibited the stemness of CRC cells. Moreover, incubation with sulforaphane, a selective chemical agonist of Nrf2, reversed this inhibitory effect in CRC. PHLPP2 acts as a tumor suppressor gene in CRC by restraining the Nrf2-ARE signaling pathway and increasing ROS levels, affecting the stemness of CRC cells. These anticancer molecular mechanisms indicate PHLLPP2's significant clinical value in prognosis prediction and targeted therapy.