While a plethora of extracellular molecules exist that modulate cellular functions via binding to membrane receptors inside the cell, their actions are mediated by relatively few signalling mechanisms. One of these is activation of phosphatidylinositol 3-kinase (PI-3K), which results in the generation of a membrane-restricted second messenger, polyphosphatidylinositides containing a 3'-phosphate. How these molecules transduced the effects of agonists of PI-3K was unclear until the recent discovery that several protein kinases become activated upon exposure to 3'-phosphorylated inositol lipids. These enzymes include protein kinase B (PKB)/AKT and PtdIns(3,4, 5)P3-dependent kinases 1 and 2, the first two of which interact with 3'-phosphorylated phosphoinositides via pleckstrin homology domains. Once targeted to the membrane by this motif, PKB becomes phosphorylated at two residues, which relieves intermolecular inhibition, allowing the activated complex to dissociate and modify its targets. Identification of these substrates is the subject of intensive research, since at least one must play a key role in suppressing apoptosis, as demonstrated by expression of activated alleles of PKB. The generation of effective transdominant mutants, coupled with genetic analysis of the protein kinase in simpler organisms, should help in elucidating outstanding questions in the functions, targets and regulation of this important mediator of PI-3K signalling.