3-Phosphoinositide-dependent protein kinase-1 (PDK1) interacts stereoselectively with the d-enantiomer of PtdIns(3,4,5)P3 (KD 1.6 nM) and PtdIns(3,4)P2 (KD 5.2 nM), but binds with lower affinity to PtdIns3P or PtdIns(4,5)P2. The binding of PtdIns(3,4,5)P3 to PDK1 was greatly decreased by making specific mutations in the pleckstrin homology (PH) domain of PDK1 or by deleting it. The same mutations also greatly decreased the rate at which PDK1 activated protein kinase Balpha (PKBalpha) in vitro in the presence of lipid vesicles containing PtdIns(3,4,5)P3, but did not affect the rate at which PDK1 activated a PKBalpha mutant lacking the PH domain in the absence of PtdIns(3,4,5)P3. When overexpressed in 293 or PAE cells, PDK1 was located at the plasma membrane and in the cytosol, but was excluded from the nucleus. Mutations that disrupted the interaction of PtdIns(3,4,5)P3 or PtdIns(4,5)P2 with PDK1 abolished the association of PDK1 with the plasma membrane. Growth-factor stimulation promoted the translocation of transfected PKBalpha to the plasma membrane, but had no effect on the subcellular distribution of PDK1 as judged by immunoelectron microscopy of fixed cells. This conclusion was also supported by confocal microscopy of green fluorescent protein-PDK1 in live cells. These results, together with previous observations, indicate that PtdIns(3,4,5)P3 plays several roles in the PDK1-induced activation of PKBalpha. First, it binds to the PH domain of PKB, altering its conformation so that it can be activated by PDK1. Secondly, interaction with PtdIns(3,4,5)P3 recruits PKB to the plasma membrane with which PDK1 is localized constitutively by virtue of its much stronger interaction with PtdIns(3,4,5)P3 or PtdIns(4,5)P2. Thirdly, the interaction of PDK1 with PtdIns(3,4,5)P3 facilitates the rate at which it can activate PKB.