In this study, we show that phosphorylated 3-phosphoinositide-dependent kinase 1 (PDK1) phosphorylates p21-activated kinase 1 (PAK1) in the presence of sphingosine. We identify threonine 423, a conserved threonine in the activation loop of kinase subdomain VIII, as the PDK1 phosphorylation site on PAK1. Threonine 423 is a previously identified PAK1 autophosphorylation site that lies within a PAK consensus phosphorylation sequence. After pretreatment with phosphatases, autophosphorylation of PAK1 occurred at all major sites except threonine 423. A phosphothreonine 423-specific antibody detected phosphorylation of recombinant, catalytically inactive PAK1 after incubation with wild-type PAK1, indicating phosphorylation of threonine 423 occurs by an intermolecular mechanism. The biological significance of PDK1 phosphorylation of PAK1 at threonine 423 in vitro is supported by the observation that these two proteins interact in vivo and that PDK1-phosphorylated PAK1 has an increased activity toward substrate. An increase of phosphorylation of catalytically inactive PAK1 was observed in COS-7 cells expressing wild-type, but not catalytically inactive, PDK1 upon elevation of intracellular sphingosine levels. PDK1 phosphorylation of PAK1 was not blocked by pretreatment with wortmannin or when PDK1 was mutated to prevent phosphatidylinositol binding, indicating this process is independent of phosphatidylinositol 3-kinase activity. The data presented here provide evidence for a novel mechanism for PAK1 regulation and activation.