The regulation of the serine-threonine kinase Akt by lipid products of phosphoinositide 3-kinase (PI 3-kinase) was investigated. Akt activity was found to correlate with the amount of phosphatidylinositol-3,4-bisphosphate (PtdIns-3,4-P2) in vivo, and synthetic PtdIns-3,4-P2 activated Akt both in vitro and in vivo. Binding of PtdIns-3,4-P2 occurred within the Akt pleckstrin homology (PH) domain and facilitated dimerization of Akt. Akt mutated in the PH domain was not activated by PI 3-kinase in vivo or by PtdIns-3, 4-P2 in vitro, and it was impaired in binding to PtdIns-3,4-P2. Examination of the binding to other phosphoinositides revealed that they bound to the Akt PH domain with much lower affinity than did PtdIns-3,4-P2 and failed to increase Akt activity. Thus, Akt is apparently regulated by the direct interaction of PtdIns-3,4-P2 with the Akt PH domain.