Serum and glucocorticoid-inducible kinase (SGK) is a novel member of the serine/threonine protein kinase family that is transcriptionally regulated. In this study, we have investigated the regulatory mechanisms that control SGK activity. We have established a peptide kinase assay for SGK and present evidence demonstrating that SGK is a component of the phosphoinositide 3 (PI 3)-kinase signaling pathway. Treatment of human embryo kidney 293 cells with insulin, IGF-1 or pervanadate induced a 3- to 12-fold activation of ectopically expressed SGK. Activation was completely abolished by pretreatment of cells with the PI 3-kinase inhibitor, LY294002. Treatment of activated SGK with protein phosphatase 2A in vitro led to kinase inactivation. Consistent with the similarity of SGK to other second-messenger regulated kinases, mutation of putative phosphorylation sites at Thr256 and Ser422 inhibited SGK activation. Cotransfection of PDK1 with SGK caused a 6-fold activation of SGK activity, whereas kinase-dead PDK1 caused no activation. GST-pulldown assays revealed a direct interaction between PDK1 and the catalytic domain of SGK. Treatment of rat mammary tumor cells with serum caused hyperphosphorylation of endogenous SGK, and promoted translocation to the nucleus. Both hyperphosphorylation and nuclear translocation could be inhibited by wortmannin, but not by rapamycin.