In vascular smooth muscle cells, exposed to hyperglycemia and insulin-like growth factor-I (IGF-I), SHPS-1 functions as a scaffold protein, and a signaling complex is assembled that leads to AKT activation. However, the underlying mechanism by which formation of this complex activates the kinase that phosphorylates AKT (Thr(308)) is unknown. Therefore, we investigated the mechanism of PDK1 recruitment to the SHPS-1 signaling complex and the consequences of disrupting PDK1 recruitment for downstream signaling. Our results show that following IGF-I stimulation, PDK1 is recruited to SHPS-1, and its recruitment is mediated by Grb2, which associates with SHPS-1 via its interaction with Pyk2, a component of the SHPS-1-associated complex. A proline-rich sequence in PDK1 bound to an Src homology 3 domain in Grb2 in response to IGF-I. Disruption of Grb2-PDK1 by expression of either a Grb2 Src homology 3 domain or a PDK1 proline to alanine mutant inhibited PDK1 recruitment to SHPS-1, leading to impaired IGF-I-stimulated AKT Thr(308) phosphorylation. Following its recruitment to SHPS-1, PDK1 was further activated via Tyr(373/376) phosphorylation, and this was required for a maximal increase in PDK1 kinase activity and AKT-mediated FOXO3a Thr(32) phosphorylation. PDK1 recruitment was also required for IGF-I to prevent apoptosis that occurred in response to hyperglycemia. Assembly of the Grb2-PDK1 complex on SHPS-1 was specific for IGF-I signaling because inhibiting PDK1 recruitment to SHPS-1 had no effect on EGF-stimulated AKT Thr(308) phosphorylation. These findings reveal a novel mechanism for recruitment of PDK1 to the SHPS-1 signaling complex, which is required for IGF-I-stimulated AKT Thr(308) phosphorylation and inhibition of apoptosis.