We have reported previously the cloning and characterization of human and mouse protein kinase B gamma (PKB gamma), the third member of the PKB family of second messenger-regulated serine/threonine kinases (Brodbeck, D., Cron, P., and Hemmings, B. A. (1999) J. Biol. Chem. 274, 9133--9136). Here we report the isolation of human and mouse PKB gamma 1, a splice variant lacking the second regulatory phosphorylation site Ser-472 in the hydrophobic C-terminal domain. Expression of PKB gamma 1 is low compared with PKB gamma, and it is regulated in different human tissues. We show that PKB gamma and PKB gamma 1 differ in their response to stimulation by insulin, pervanadate, peroxide, or okadaic acid. Activation of PKB gamma 1 requires phosphorylation at a single regulatory site Thr-305. Interestingly, this site is phosphorylated to a higher extent in PKB gamma compared with PKB gamma 1 upon maximal stimulation by pervanadate, and this is reflected in the respective specific kinase activities. Furthermore, upon insulin stimulation of transfected cells, PKB gamma 1 translocates to the plasma membrane to a lesser extent than PKB gamma. Taken together, these results suggest that phosphorylation of the hydrophobic motif at the extreme C terminus of PKB gamma may facilitate translocation of the kinase to the membrane and/or its phosphorylation on the activation loop site by phosphoinositide-dependent protein kinase-1.