Phosphoinositide (PI) 3-kinase is required for most insulin and insulin-like growth factor (IGF) 1-dependent cellular responses. The p85 regulatory subunit of PI 3-kinase is required to mediate the insulin-dependent recruitment of PI 3-kinase to the plasma membrane, yet mice with reduced p85 expression have increased insulin sensitivity. To further understand the role of p85, we examined IGF-1-dependent translocation of p85alpha by using a green fluorescence protein (GFP)-tagged p85alpha (EGFP-p85alpha). In response to IGF-1, but not to PDGF signaling, EGFP-p85alpha translocates to discrete foci in the cell. These foci contain the insulin receptor substrate (IRS) 1 adaptor molecule, and their formation requires the binding of p85 to IRS-1. Surprisingly, monomeric p85 is preferentially localized to these foci compared with the p85-p110 dimer, and these foci are not sites of phosphatidylinositol-3,4,5-trisphosphate production. Ultrastructural analysis reveals that p85-IRS-1 foci are cytosolic protein complexes devoid of membrane. These results suggest a mechanism of signal down-regulation of IRS-1 that is mediated by monomeric p85 through the formation of a sequestration complex between p85 and IRS-1.