Involvement of the pleckstrin homology (PH) domain in the insulin-stimulated activation of protein kinase B (PKB) was investigated in human embryonic kidney 293 cells. Different PKB constructs that contain mutations or deletions in the PH domain were transfected into cells, and the results on the basal and insulin-induced kinase activities were analyzed. Deletion of the entire PH domain (DeltaPH-PKB) did not impair the kinase activity; in contrast, the basal activity was elevated with respect to wild-type PKB. In addition, DeltaPH-PKB was responsive to insulin, and as for wild-type PKB, this was dependent on phosphoinositide 3-kinase. By contrast, a point mutation within the PH domain that impairs phospholipid binding (R25C) resulted in a construct that was not responsive to insulin. However, this defect was overcome by mutations that mimic the phosphorylation state of the active kinase. The increase in the basal activity of DeltaPH-PKB was shown to be due to an elevation in the level of phosphorylation of this construct. In addition, the subcellular localization of DeltaPH-PKB, as determined by both immunofluorescence and fractionation, was predominately cytosolic, and DeltaPH-PKB was present in the plasma membrane at much lower levels compared with wild-type PKB. These data show that phosphorylation is the major factor regulating the activity of PKB and that either removal of the PH domain or binding of phospholipids is required to permit this phosphorylation. In addition, membrane localization does not appear to be required for the activation process, but instead, binding of PKB to membrane phospholipids permits a conformational change in the molecule that allows for phosphorylation.